Correlation Between IShares MSCI and IShares Focused
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Focused 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 Focused 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 iShares Focused Value, you can compare the effects of market volatilities on IShares MSCI and IShares Focused 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 Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Focused.
Diversification Opportunities for IShares MSCI and IShares Focused
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and iShares Focused Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Focused Value 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 IShares Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Focused Value has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Focused go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Focused
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.25 times less return on investment than IShares Focused. In addition to that, IShares MSCI is 1.04 times more volatile than iShares Focused Value. It trades about 0.13 of its total potential returns per unit of risk. iShares Focused Value is currently generating about 0.16 per unit of volatility. If you would invest 5,958 in iShares Focused Value on November 3, 2024 and sell it today you would earn a total of 1,399 from holding iShares Focused Value or generate 23.49% 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 USA vs. iShares Focused Value
Performance |
| Timeline |
| iShares MSCI USA |
| iShares Focused Value |
IShares MSCI and IShares Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Focused
The main advantage of trading using opposite IShares MSCI and IShares Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Focused 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 Focused will offset losses from the drop in IShares Focused'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 |
| IShares Focused vs. Roundhill Acquirers Deep | IShares Focused vs. BlackRock Equity Factor | IShares Focused vs. iShares MSCI USA | IShares Focused vs. iShares Evolved Discretionary |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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