Correlation Between IShares MSCI and IShares Asia
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Asia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares MSCI and IShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and iShares Asia 50, you can compare the effects of market volatilities on IShares MSCI and IShares Asia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares MSCI with a short position of IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Asia.
Diversification Opportunities for IShares MSCI and IShares Asia
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and IShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and iShares Asia 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia 50 and IShares MSCI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares MSCI EAFE are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia 50 has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Asia go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Asia
Considering the 90-day investment horizon IShares MSCI is expected to generate 1.21 times less return on investment than IShares Asia. But when comparing it to its historical volatility, iShares MSCI EAFE is 1.56 times less risky than IShares Asia. It trades about 0.03 of its potential returns per unit of risk. iShares Asia 50 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,160 in iShares Asia 50 on September 3, 2024 and sell it today you would earn a total of 764.00 from holding iShares Asia 50 or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. iShares Asia 50
Performance |
| Timeline |
| iShares MSCI EAFE |
| iShares Asia 50 |
IShares MSCI and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Asia
The main advantage of trading using opposite IShares MSCI and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Asia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Asia will offset losses from the drop in IShares Asia's long position.| IShares MSCI vs. FT Vest Equity | IShares MSCI vs. Northern Lights | IShares MSCI vs. Dimensional International High | IShares MSCI vs. JPMorgan Fundamental Data |
| IShares Asia vs. Alliancebernstein National Municipal | IShares Asia vs. Armada Hflr Pr | IShares Asia vs. Aberdeen Global Dynamic |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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