Correlation Between IShares MSCI and REX AI

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and REX AI 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 REX AI 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 REX AI Equity, you can compare the effects of market volatilities on IShares MSCI and REX AI 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 REX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and REX AI.

Diversification Opportunities for IShares MSCI and REX AI

-0.61

Correlation Coefficient

IShares MSCI  REX AI

Excellent diversification

The 3 months correlation between IShares and REX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and REX AI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX AI Equity 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 REX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX AI Equity has no effect on the direction of IShares MSCI i.e., IShares MSCI and REX AI go up and down completely randomly.

Pair Corralation between IShares MSCI and REX AI

Given the investment horizon of 90 days iShares MSCI China is expected to generate 1.92 times more return on investment than REX AI. However, IShares MSCI is 1.92 times more volatile than REX AI Equity. It trades about 0.06 of its potential returns per unit of risk. REX AI Equity is currently generating about 0.06 per unit of risk. If you would invest  4,158  in iShares MSCI China on September 29, 2024 and sell it today you would earn a total of  589.00  from holding iShares MSCI China or generate 14.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

iShares MSCI China  vs.  REX AI Equity

iShares MSCI China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, IShares MSCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

REX AI Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares MSCI and REX AI

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

The idea behind iShares MSCI China and REX AI Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.