Correlation Between IShares Canadian and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Canadian 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 IShares Canadian and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Canadian Universe and iShares MSCI Emerging, you can compare the effects of market volatilities on IShares Canadian 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 IShares Canadian with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Canadian and IShares MSCI.
Diversification Opportunities for IShares Canadian and IShares MSCI
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian Universe 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 IShares Canadian 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 Canadian Universe 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 IShares Canadian i.e., IShares Canadian and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares Canadian and IShares MSCI
Assuming the 90 days trading horizon iShares Canadian Universe is expected to generate 0.48 times more return on investment than IShares MSCI. However, iShares Canadian Universe is 2.1 times less risky than IShares MSCI. It trades about 0.1 of its potential returns per unit of risk. iShares MSCI Emerging is currently generating about 0.02 per unit of risk. If you would invest 2,821 in iShares Canadian Universe on September 13, 2024 and sell it today you would earn a total of 45.00 from holding iShares Canadian Universe or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Canadian Universe vs. iShares MSCI Emerging
Performance |
| Timeline |
| iShares Canadian Universe |
| iShares MSCI Emerging |
IShares Canadian and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Canadian and IShares MSCI
The main advantage of trading using opposite IShares Canadian and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Canadian 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.| IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real | IShares Canadian vs. iShares Canadian Value |
| IShares MSCI vs. iShares SPTSX Small | IShares MSCI vs. iShares MSCI World | IShares MSCI vs. iShares Small Cap | IShares MSCI vs. iShares MSCI EAFE |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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