Correlation Between IShares MSCI and TD International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and TD International 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 TD International 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 TD International Equity, you can compare the effects of market volatilities on IShares MSCI and TD International 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 TD International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and TD International.
Diversification Opportunities for IShares MSCI and TD International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and THE is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and TD International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD International Equity 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 TD International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD International Equity has no effect on the direction of IShares MSCI i.e., IShares MSCI and TD International go up and down completely randomly.
Pair Corralation between IShares MSCI and TD International
Assuming the 90 days trading horizon iShares MSCI EAFE is expected to generate 0.96 times more return on investment than TD International. However, iShares MSCI EAFE is 1.05 times less risky than TD International. It trades about 0.05 of its potential returns per unit of risk. TD International Equity is currently generating about -0.02 per unit of risk. If you would invest 3,559 in iShares MSCI EAFE on October 17, 2024 and sell it today you would earn a total of 35.00 from holding iShares MSCI EAFE or generate 0.98% 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 EAFE vs. TD International Equity
Performance |
| Timeline |
| iShares MSCI EAFE |
| TD International Equity |
IShares MSCI and TD International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and TD International
The main advantage of trading using opposite IShares MSCI and TD International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, TD International 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 TD International will offset losses from the drop in TD International's 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 |
| TD International vs. TD International Equity | TD International vs. TD Equity CAD | TD International vs. TD Canadian Equity | TD International vs. TD Canadian Aggregate |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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