Correlation Between Vanguard MSCI and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Vanguard MSCI and IShares MSCI 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 Vanguard MSCI and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard MSCI International and iShares MSCI Emerging, you can compare the effects of market volatilities on Vanguard MSCI and IShares MSCI 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 Vanguard MSCI with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard MSCI and IShares MSCI.
Diversification Opportunities for Vanguard MSCI and IShares MSCI
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard MSCI International and iShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Emerging and Vanguard 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 Vanguard MSCI International are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Emerging has no effect on the direction of Vanguard MSCI i.e., Vanguard MSCI and IShares MSCI go up and down completely randomly.
Pair Corralation between Vanguard MSCI and IShares MSCI
Assuming the 90 days trading horizon Vanguard MSCI International is expected to generate 0.94 times more return on investment than IShares MSCI. However, Vanguard MSCI International is 1.07 times less risky than IShares MSCI. It trades about 0.09 of its potential returns per unit of risk. iShares MSCI Emerging is currently generating about 0.05 per unit of risk. If you would invest 7,610 in Vanguard MSCI International on August 25, 2024 and sell it today you would earn a total of 3,085 from holding Vanguard MSCI International or generate 40.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard MSCI International vs. iShares MSCI Emerging
Performance |
| Timeline |
| Vanguard MSCI Intern |
| iShares MSCI Emerging |
Vanguard MSCI and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard MSCI and IShares MSCI
The main advantage of trading using opposite Vanguard MSCI and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard MSCI position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Vanguard MSCI vs. ETFS Morningstar Global | Vanguard MSCI vs. BetaShares Geared Equity | Vanguard MSCI vs. VanEck Vectors Australian | Vanguard MSCI vs. SPDR SPASX 200 |
| IShares MSCI vs. Beta Shares SPASX | IShares MSCI vs. Vanguard Total Market | IShares MSCI vs. iShares SP 500 | IShares MSCI vs. Vanguard MSCI International |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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