Correlation Between IShares China and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares China and IShares 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 China and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China CNY and iShares MSCI Brazil, you can compare the effects of market volatilities on IShares China and IShares 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 China with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and IShares MSCI.
Diversification Opportunities for IShares China and IShares MSCI
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and iShares MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Brazil and IShares China 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 China CNY are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Brazil has no effect on the direction of IShares China i.e., IShares China and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares China and IShares MSCI
Assuming the 90 days trading horizon iShares China CNY is expected to generate 0.18 times more return on investment than IShares MSCI. However, iShares China CNY is 5.53 times less risky than IShares MSCI. It trades about 0.18 of its potential returns per unit of risk. iShares MSCI Brazil is currently generating about -0.17 per unit of risk. If you would invest 560.00 in iShares China CNY on September 23, 2024 and sell it today you would earn a total of 11.00 from holding iShares China CNY or generate 1.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares China CNY vs. iShares MSCI Brazil
Performance |
Timeline |
iShares China CNY |
iShares MSCI Brazil |
IShares China and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares China and IShares MSCI
The main advantage of trading using opposite IShares China and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, IShares 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.IShares China vs. SPDR Dow Jones | IShares China vs. iShares Core MSCI | IShares China vs. Vanguard FTSE All World | IShares China vs. iShares Core MSCI |
IShares MSCI vs. SPDR Dow Jones | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. Vanguard FTSE All World | IShares MSCI vs. iShares China CNY |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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