Correlation Between IShares MSCI and Wahed Dow

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

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

Diversification Opportunities for IShares MSCI and Wahed Dow

0.91

Correlation Coefficient

IShares MSCI  Wahed Dow

Almost no diversification

The 3 months correlation between IShares and Wahed is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Intl and Wahed Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed Dow Jones 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 Intl are associated (or correlated) with Wahed Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed Dow Jones has no effect on the direction of IShares MSCI i.e., IShares MSCI and Wahed Dow go up and down completely randomly.

Pair Corralation between IShares MSCI and Wahed Dow

Given the investment horizon of 90 days iShares MSCI Intl is expected to generate 0.96 times more return on investment than Wahed Dow. However, iShares MSCI Intl is 1.04 times less risky than Wahed Dow. It trades about 0.0 of its potential returns per unit of risk. Wahed Dow Jones is currently generating about -0.01 per unit of risk. If you would invest  3,945  in iShares MSCI Intl on September 2, 2024 and sell it today you would lose (21.00) from holding iShares MSCI Intl or give up 0.53% of portfolio value over 90 days.

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

iShares MSCI Intl  vs.  Wahed Dow Jones

iShares MSCI Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Intl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares MSCI is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Wahed Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wahed Dow Jones has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Wahed Dow is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares MSCI and Wahed Dow

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

The idea behind iShares MSCI Intl and Wahed Dow Jones 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.