Correlation Between IShares MSCI and Kurv Yield

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

Diversification Opportunities for IShares MSCI and Kurv Yield

-0.36

Correlation Coefficient

IShares MSCI  Kurv Yield

Very good diversification

The 3 months correlation between IShares and Kurv is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Kurv Yield Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kurv Yield Premium 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 Kurv Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kurv Yield Premium has no effect on the direction of IShares MSCI i.e., IShares MSCI and Kurv Yield go up and down completely randomly.

Pair Corralation between IShares MSCI and Kurv Yield

Given the investment horizon of 90 days IShares MSCI is expected to generate 2.76 times less return on investment than Kurv Yield. But when comparing it to its historical volatility, iShares MSCI China is 1.09 times less risky than Kurv Yield. It trades about 0.07 of its potential returns per unit of risk. Kurv Yield Premium is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,273  in Kurv Yield Premium on September 23, 2024 and sell it today you would earn a total of  915.00  from holding Kurv Yield Premium or generate 40.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares MSCI China  vs.  Kurv Yield Premium

iShares MSCI China

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kurv Yield Premium

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kurv Yield Premium are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Kurv Yield reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and Kurv Yield

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

The idea behind iShares MSCI China and Kurv Yield Premium 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.