Correlation Between IShares MSCI and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Canadian 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 IShares Canadian 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 iShares Canadian Universe, you can compare the effects of market volatilities on IShares MSCI and IShares Canadian 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Canadian.
Diversification Opportunities for IShares MSCI and IShares Canadian
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and iShares Canadian Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Universe 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Universe has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Canadian go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Canadian
Assuming the 90 days trading horizon iShares MSCI EAFE is expected to generate 1.52 times more return on investment than IShares Canadian. However, IShares MSCI is 1.52 times more volatile than iShares Canadian Universe. It trades about 0.14 of its potential returns per unit of risk. iShares Canadian Universe is currently generating about 0.06 per unit of risk. If you would invest 3,641 in iShares MSCI EAFE on November 3, 2024 and sell it today you would earn a total of 114.00 from holding iShares MSCI EAFE or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. iShares Canadian Universe
Performance |
| Timeline |
| iShares MSCI EAFE |
| iShares Canadian Universe |
IShares MSCI and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Canadian
The main advantage of trading using opposite IShares MSCI and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Canadian 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 Canadian will offset losses from the drop in IShares Canadian'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 |
| IShares Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares MSCI EAFE | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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