Correlation Between IShares MSCI and BMO MSCI
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and BMO 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 MSCI and BMO MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Emerging and BMO MSCI India, you can compare the effects of market volatilities on IShares MSCI and BMO 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 MSCI with a short position of BMO MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and BMO MSCI.
Diversification Opportunities for IShares MSCI and BMO MSCI
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and BMO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and BMO MSCI India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO MSCI India 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 Emerging are associated (or correlated) with BMO MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO MSCI India has no effect on the direction of IShares MSCI i.e., IShares MSCI and BMO MSCI go up and down completely randomly.
Pair Corralation between IShares MSCI and BMO MSCI
Assuming the 90 days trading horizon iShares MSCI Emerging is expected to generate 0.76 times more return on investment than BMO MSCI. However, iShares MSCI Emerging is 1.31 times less risky than BMO MSCI. It trades about 0.29 of its potential returns per unit of risk. BMO MSCI India is currently generating about -0.11 per unit of risk. If you would invest 3,341 in iShares MSCI Emerging on November 27, 2024 and sell it today you would earn a total of 135.00 from holding iShares MSCI Emerging or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Emerging vs. BMO MSCI India
Performance |
| Timeline |
| iShares MSCI Emerging |
| BMO MSCI India |
IShares MSCI and BMO MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and BMO MSCI
The main advantage of trading using opposite IShares MSCI and BMO MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, BMO 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 BMO MSCI will offset losses from the drop in BMO MSCI's long position.| IShares MSCI vs. iShares SPTSX Small | IShares MSCI vs. iShares MSCI World | IShares MSCI vs. iShares Small Cap | IShares MSCI vs. iShares MSCI EAFE |
| BMO MSCI vs. BMO MSCI China | BMO MSCI vs. iShares India Index | BMO MSCI vs. BMO MSCI Emerging | BMO MSCI vs. BMO Equal Weight |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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