Correlation Between IShares MSCI and Mikron Holding

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

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

Diversification Opportunities for IShares MSCI and Mikron Holding

0.8

Correlation Coefficient

IShares MSCI  Mikron Holding

Very poor diversification

The 3 months correlation between IShares and Mikron is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Brazil and Mikron Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mikron Holding AG 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 Brazil are associated (or correlated) with Mikron Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mikron Holding AG has no effect on the direction of IShares MSCI i.e., IShares MSCI and Mikron Holding go up and down completely randomly.

Pair Corralation between IShares MSCI and Mikron Holding

Assuming the 90 days trading horizon iShares MSCI Brazil is expected to under-perform the Mikron Holding. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Brazil is 1.77 times less risky than Mikron Holding. The etf trades about -0.35 of its potential returns per unit of risk. The Mikron Holding AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,375  in Mikron Holding AG on October 5, 2024 and sell it today you would earn a total of  65.00  from holding Mikron Holding AG or generate 4.73% return on investment over 90 days.

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

iShares MSCI Brazil  vs.  Mikron Holding AG

iShares MSCI Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Mikron Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mikron Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with IShares MSCI and Mikron Holding

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

The idea behind iShares MSCI Brazil and Mikron Holding AG 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.