Correlation Between DSJA and IShares MSCI

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

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

Diversification Opportunities for DSJA and IShares MSCI

-0.69

Correlation Coefficient

DSJA  IShares MSCI

Excellent diversification

The 3 months correlation between DSJA and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and iShares MSCI Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Austria and DSJA 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 DSJA 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 Austria has no effect on the direction of DSJA i.e., DSJA and IShares MSCI go up and down completely randomly.

Pair Corralation between DSJA and IShares MSCI

Given the investment horizon of 90 days DSJA is expected to generate 0.66 times more return on investment than IShares MSCI. However, DSJA is 1.5 times less risky than IShares MSCI. It trades about 0.29 of its potential returns per unit of risk. iShares MSCI Austria is currently generating about 0.05 per unit of risk. If you would invest  2,518  in DSJA on October 5, 2024 and sell it today you would earn a total of  464.99  from holding DSJA or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	20.22%
Values	Daily Returns

DSJA  vs.  iShares MSCI Austria

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, DSJA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares MSCI Austria

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with DSJA and IShares MSCI

The main advantage of trading using opposite DSJA and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA 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 DSJA and iShares MSCI Austria 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.