Correlation Between IShares MSCI and BlackRock Equity
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and BlackRock Equity 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 BlackRock Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI USA and BlackRock Equity Factor, you can compare the effects of market volatilities on IShares MSCI and BlackRock Equity 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 BlackRock Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and BlackRock Equity.
Diversification Opportunities for IShares MSCI and BlackRock Equity
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and BlackRock is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and BlackRock Equity Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Equity Factor 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 USA are associated (or correlated) with BlackRock Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Equity Factor has no effect on the direction of IShares MSCI i.e., IShares MSCI and BlackRock Equity go up and down completely randomly.
Pair Corralation between IShares MSCI and BlackRock Equity
Given the investment horizon of 90 days iShares MSCI USA is expected to generate 1.33 times more return on investment than BlackRock Equity. However, IShares MSCI is 1.33 times more volatile than BlackRock Equity Factor. It trades about 0.12 of its potential returns per unit of risk. BlackRock Equity Factor is currently generating about 0.15 per unit of risk. If you would invest 6,171 in iShares MSCI USA on September 1, 2024 and sell it today you would earn a total of 1,197 from holding iShares MSCI USA or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares MSCI USA vs. BlackRock Equity Factor
Performance |
| Timeline |
| iShares MSCI USA |
| BlackRock Equity Factor |
IShares MSCI and BlackRock Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and BlackRock Equity
The main advantage of trading using opposite IShares MSCI and BlackRock Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, BlackRock Equity 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 BlackRock Equity will offset losses from the drop in BlackRock Equity's long position.| IShares MSCI vs. iShares Equity Factor | IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI USA |
| BlackRock Equity vs. iShares Focused Value | BlackRock Equity vs. SPDR SSGA Sector | BlackRock Equity vs. iShares Equity Factor | BlackRock Equity vs. iShares MSCI USA |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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