Correlation Between IShares MSCI and PAK

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

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

Diversification Opportunities for IShares MSCI and PAK

-0.59

Correlation Coefficient

IShares MSCI  PAK

Excellent diversification

The 3 months correlation between IShares and PAK is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Mexico and PAK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAK 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 Mexico are associated (or correlated) with PAK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAK has no effect on the direction of IShares MSCI i.e., IShares MSCI and PAK go up and down completely randomly.

Pair Corralation between IShares MSCI and PAK

If you would invest  1,336  in PAK on September 5, 2024 and sell it today you would earn a total of  0.00  from holding PAK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.18%
Values	Daily Returns

iShares MSCI Mexico  vs.  PAK

iShares MSCI Mexico

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PAK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PAK is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares MSCI and PAK

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

The idea behind iShares MSCI Mexico and PAK 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..