Correlation Between IShares Core and CI International

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

By analyzing existing cross correlation between iShares Core MSCI and CI International Quality, you can compare the effects of market volatilities on IShares Core and CI International 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 Core with a short position of CI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and CI International.

Diversification Opportunities for IShares Core and CI International

0.72

Correlation Coefficient

IShares Core  CI International

Poor diversification

The 3 months correlation between IShares and IQD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and CI International Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI International Quality and IShares Core 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 Core MSCI are associated (or correlated) with CI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI International Quality has no effect on the direction of IShares Core i.e., IShares Core and CI International go up and down completely randomly.

Pair Corralation between IShares Core and CI International

Assuming the 90 days trading horizon IShares Core is expected to generate 1.09 times less return on investment than CI International. But when comparing it to its historical volatility, iShares Core MSCI is 1.27 times less risky than CI International. It trades about 0.17 of its potential returns per unit of risk. CI International Quality is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,376  in CI International Quality on September 15, 2024 and sell it today you would earn a total of  67.00  from holding CI International Quality or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

iShares Core MSCI  vs.  CI International Quality

iShares Core MSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI International Quality

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Core and CI International

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

The idea behind iShares Core MSCI and CI International Quality 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.