Correlation Between IShares MSCI and IQ Candriam

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IQ Candriam 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 IQ Candriam 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 IQ Candriam ESG, you can compare the effects of market volatilities on IShares MSCI and IQ Candriam 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 IQ Candriam. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IQ Candriam.

Diversification Opportunities for IShares MSCI and IQ Candriam

1.0

Correlation Coefficient

IShares MSCI  IQ Candriam

No risk reduction

The 3 months correlation between IShares and IQSI is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and IQ Candriam ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Candriam ESG 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 IQ Candriam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Candriam ESG has no effect on the direction of IShares MSCI i.e., IShares MSCI and IQ Candriam go up and down completely randomly.

Pair Corralation between IShares MSCI and IQ Candriam

Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 1.02 times more return on investment than IQ Candriam. However, IShares MSCI is 1.02 times more volatile than IQ Candriam ESG. It trades about -0.31 of its potential returns per unit of risk. IQ Candriam ESG is currently generating about -0.34 per unit of risk. If you would invest  7,900  in iShares MSCI EAFE on October 7, 2024 and sell it today you would lose (332.00) from holding iShares MSCI EAFE or give up 4.2% of portfolio value over 90 days.

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

iShares MSCI EAFE  vs.  IQ Candriam ESG

iShares MSCI EAFE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI EAFE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

IQ Candriam ESG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQ Candriam ESG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with IShares MSCI and IQ Candriam

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

The idea behind iShares MSCI EAFE and IQ Candriam ESG 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.