Correlation Between IShares MSCI and IShares India
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares India 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 India into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI India and iShares India 50, you can compare the effects of market volatilities on IShares MSCI and IShares India 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 India. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares India.
Diversification Opportunities for IShares MSCI and IShares India
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI India and iShares India 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India 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 India are associated (or correlated) with IShares India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India 50 has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares India go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares India
Given the investment horizon of 90 days iShares MSCI India is expected to generate 1.34 times more return on investment than IShares India. However, IShares MSCI is 1.34 times more volatile than iShares India 50. It trades about 0.08 of its potential returns per unit of risk. iShares India 50 is currently generating about 0.04 per unit of risk. If you would invest 5,489 in iShares MSCI India on August 23, 2024 and sell it today you would earn a total of 2,467 from holding iShares MSCI India or generate 44.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI India vs. iShares India 50
Performance |
| Timeline |
| iShares MSCI India |
| iShares India 50 |
IShares MSCI and IShares India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares India
The main advantage of trading using opposite IShares MSCI and IShares India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares India 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 India will offset losses from the drop in IShares India's long position.| IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Invesco India ETF | IShares MSCI vs. WisdomTree India Earnings |
| IShares India vs. iShares MSCI India | IShares India vs. Invesco India ETF | IShares India vs. WisdomTree India Earnings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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