Correlation Between IShares MSCI and SmartETFs Dividend

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

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

Diversification Opportunities for IShares MSCI and SmartETFs Dividend

0.78

Correlation Coefficient

IShares MSCI  SmartETFs Dividend

Poor diversification

The 3 months correlation between IShares and SmartETFs is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and SmartETFs Dividend Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Dividend 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 Global are associated (or correlated) with SmartETFs Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Dividend has no effect on the direction of IShares MSCI i.e., IShares MSCI and SmartETFs Dividend go up and down completely randomly.

Pair Corralation between IShares MSCI and SmartETFs Dividend

Given the investment horizon of 90 days IShares MSCI is expected to generate 1.15 times less return on investment than SmartETFs Dividend. But when comparing it to its historical volatility, iShares MSCI Global is 1.15 times less risky than SmartETFs Dividend. It trades about 0.05 of its potential returns per unit of risk. SmartETFs Dividend Builder is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,940  in SmartETFs Dividend Builder on September 4, 2024 and sell it today you would earn a total of  53.00  from holding SmartETFs Dividend Builder or generate 1.8% return on investment over 90 days.

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

iShares MSCI Global  vs.  SmartETFs Dividend Builder

iShares MSCI Global

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SmartETFs Dividend

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Dividend Builder are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SmartETFs Dividend is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares MSCI and SmartETFs Dividend

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

The idea behind iShares MSCI Global and SmartETFs Dividend Builder 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.