Correlation Between Ishares Msci and Polen Us

Can any of the company-specific risk be diversified away by investing in both Ishares Msci and Polen Us 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 Polen Us into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ishares Msci Eafe and Polen Smid, you can compare the effects of market volatilities on Ishares Msci and Polen Us 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 Polen Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Msci and Polen Us.

Diversification Opportunities for Ishares Msci and Polen Us

-0.67

Correlation Coefficient

Ishares Msci  Polen Us

Excellent diversification

The 3 months correlation between Ishares and Polen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Msci Eafe and Polen Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Smid 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 Eafe are associated (or correlated) with Polen Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Smid has no effect on the direction of Ishares Msci i.e., Ishares Msci and Polen Us go up and down completely randomly.

Pair Corralation between Ishares Msci and Polen Us

Assuming the 90 days horizon Ishares Msci Eafe is expected to generate 0.66 times more return on investment than Polen Us. However, Ishares Msci Eafe is 1.52 times less risky than Polen Us. It trades about 0.2 of its potential returns per unit of risk. Polen Smid is currently generating about -0.13 per unit of risk. If you would invest  1,517  in Ishares Msci Eafe on December 26, 2024 and sell it today you would earn a total of  157.00  from holding Ishares Msci Eafe or generate 10.35% return on investment over 90 days.

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

Ishares Msci Eafe  vs.  Polen Smid

Ishares Msci Eafe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Msci Eafe are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ishares Msci may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Polen Smid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polen Smid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ishares Msci and Polen Us

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

The idea behind Ishares Msci Eafe and Polen Smid 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.