Correlation Between IShares MSCI and HANetf ICAV

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and HANetf ICAV 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 HANetf ICAV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares MSCI China and HANetf ICAV , you can compare the effects of market volatilities on IShares MSCI and HANetf ICAV 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 HANetf ICAV. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and HANetf ICAV.

Diversification Opportunities for IShares MSCI and HANetf ICAV

0.81

Correlation Coefficient

IShares MSCI  HANetf ICAV

Very poor diversification

The 3 months correlation between IShares and HANetf is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV 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 China are associated (or correlated) with HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of IShares MSCI i.e., IShares MSCI and HANetf ICAV go up and down completely randomly.

Pair Corralation between IShares MSCI and HANetf ICAV

Assuming the 90 days trading horizon iShares MSCI China is expected to generate 2.36 times more return on investment than HANetf ICAV. However, IShares MSCI is 2.36 times more volatile than HANetf ICAV . It trades about 0.07 of its potential returns per unit of risk. HANetf ICAV is currently generating about 0.0 per unit of risk. If you would invest  400.00  in iShares MSCI China on September 26, 2024 and sell it today you would earn a total of  40.00  from holding iShares MSCI China or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares MSCI China  vs.  HANetf ICAV

iShares MSCI China

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HANetf ICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HANetf ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HANetf ICAV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares MSCI and HANetf ICAV

The main advantage of trading using opposite IShares MSCI and HANetf ICAV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, HANetf ICAV 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 HANetf ICAV will offset losses from the drop in HANetf ICAV's long position.

The idea behind iShares MSCI China and HANetf ICAV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.