Correlation Between IShares MSCI and Desjardins
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Desjardins 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 Desjardins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Desjardins RI Emerging, you can compare the effects of market volatilities on IShares MSCI and Desjardins 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 Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Desjardins.
Diversification Opportunities for IShares MSCI and Desjardins
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Desjardins is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Desjardins RI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Emerging 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 EAFE are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Emerging has no effect on the direction of IShares MSCI i.e., IShares MSCI and Desjardins go up and down completely randomly.
Pair Corralation between IShares MSCI and Desjardins
Assuming the 90 days trading horizon IShares MSCI is expected to generate 1.23 times less return on investment than Desjardins. But when comparing it to its historical volatility, iShares MSCI EAFE is 1.17 times less risky than Desjardins. It trades about 0.08 of its potential returns per unit of risk. Desjardins RI Emerging is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,909 in Desjardins RI Emerging on September 12, 2024 and sell it today you would earn a total of 439.00 from holding Desjardins RI Emerging or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Desjardins RI Emerging
Performance |
| Timeline |
| iShares MSCI EAFE |
| Desjardins RI Emerging |
IShares MSCI and Desjardins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Desjardins
The main advantage of trading using opposite IShares MSCI and Desjardins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Desjardins 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 Desjardins will offset losses from the drop in Desjardins' long position.| IShares MSCI vs. iShares SPTSX Completion | IShares MSCI vs. iShares Canadian Universe | IShares MSCI vs. iShares Core SP | IShares MSCI vs. iShares SPTSX Capped |
| Desjardins vs. iShares SPTSX Small | Desjardins vs. iShares MSCI World | Desjardins vs. iShares Small Cap | Desjardins 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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