Correlation Between IShares MSCI and AdvisorShares

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

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

Diversification Opportunities for IShares MSCI and AdvisorShares

0.66

Correlation Coefficient

IShares MSCI  AdvisorShares

Poor diversification

The 3 months correlation between IShares and AdvisorShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Canada and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares 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 Canada are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of IShares MSCI i.e., IShares MSCI and AdvisorShares go up and down completely randomly.

Pair Corralation between IShares MSCI and AdvisorShares

If you would invest  4,090  in iShares MSCI Canada on September 5, 2024 and sell it today you would earn a total of  210.00  from holding iShares MSCI Canada or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

iShares MSCI Canada  vs.  AdvisorShares

iShares MSCI Canada

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Canada are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AdvisorShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, AdvisorShares is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares MSCI and AdvisorShares

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

The idea behind iShares MSCI Canada and AdvisorShares 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.