Correlation Between IShares MSCI and HCM Defender
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and HCM Defender 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 HCM Defender 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 HCM Defender 100, you can compare the effects of market volatilities on IShares MSCI and HCM Defender 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 HCM Defender. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and HCM Defender.
Diversification Opportunities for IShares MSCI and HCM Defender
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and HCM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and HCM Defender 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Defender 100 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 HCM Defender. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Defender 100 has no effect on the direction of IShares MSCI i.e., IShares MSCI and HCM Defender go up and down completely randomly.
Pair Corralation between IShares MSCI and HCM Defender
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.41 times less return on investment than HCM Defender. But when comparing it to its historical volatility, iShares MSCI USA is 1.56 times less risky than HCM Defender. It trades about 0.11 of its potential returns per unit of risk. HCM Defender 100 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,660 in HCM Defender 100 on September 1, 2024 and sell it today you would earn a total of 969.00 from holding HCM Defender 100 or generate 17.12% 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. HCM Defender 100
Performance |
| Timeline |
| iShares MSCI USA |
| HCM Defender 100 |
IShares MSCI and HCM Defender Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and HCM Defender
The main advantage of trading using opposite IShares MSCI and HCM Defender positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, HCM Defender 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 HCM Defender will offset losses from the drop in HCM Defender's long position.| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA |
| HCM Defender vs. HCM Defender 500 | HCM Defender vs. Xtrackers SP 500 | HCM Defender vs. Pacer Trendpilot 100 | HCM Defender vs. American Century Quality |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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