Correlation Between Codexis and IShares MSCI

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

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

Diversification Opportunities for Codexis and IShares MSCI

0.41

Correlation Coefficient

Codexis  IShares MSCI

Very weak diversification

The 3 months correlation between Codexis and IShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Codexis and iShares MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI and Codexis 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 Codexis are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI has no effect on the direction of Codexis i.e., Codexis and IShares MSCI go up and down completely randomly.

Pair Corralation between Codexis and IShares MSCI

Given the investment horizon of 90 days Codexis is expected to generate 5.37 times more return on investment than IShares MSCI. However, Codexis is 5.37 times more volatile than iShares MSCI. It trades about 0.02 of its potential returns per unit of risk. iShares MSCI is currently generating about 0.07 per unit of risk. If you would invest  651.00  in Codexis on October 11, 2024 and sell it today you would lose (175.00) from holding Codexis or give up 26.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Codexis  vs.  iShares MSCI

Codexis

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Codexis and IShares MSCI

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

The idea behind Codexis and iShares MSCI 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.