Correlation Between IShares MSCI and 896215AH3

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and 896215AH3 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 896215AH3 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 US896215AH37, you can compare the effects of market volatilities on IShares MSCI and 896215AH3 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 896215AH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and 896215AH3.

Diversification Opportunities for IShares MSCI and 896215AH3

0.44

Correlation Coefficient

IShares MSCI  896215AH3

Very weak diversification

The 3 months correlation between IShares and 896215AH3 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and US896215AH37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US896215AH37 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 896215AH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US896215AH37 has no effect on the direction of IShares MSCI i.e., IShares MSCI and 896215AH3 go up and down completely randomly.

Pair Corralation between IShares MSCI and 896215AH3

Given the investment horizon of 90 days iShares MSCI China is expected to generate 8.73 times more return on investment than 896215AH3. However, IShares MSCI is 8.73 times more volatile than US896215AH37. It trades about 0.08 of its potential returns per unit of risk. US896215AH37 is currently generating about -0.25 per unit of risk. If you would invest  4,635  in iShares MSCI China on September 28, 2024 and sell it today you would earn a total of  148.00  from holding iShares MSCI China or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

iShares MSCI China  vs.  US896215AH37

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.

US896215AH37

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US896215AH37 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 896215AH3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares MSCI and 896215AH3

The main advantage of trading using opposite IShares MSCI and 896215AH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, 896215AH3 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 896215AH3 will offset losses from the drop in 896215AH3's long position.

The idea behind iShares MSCI China and US896215AH37 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 CEOs Directory module to screen CEOs from public companies around the world.