Correlation Between EGPT and IShares MSCI

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

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

Diversification Opportunities for EGPT and IShares MSCI

0.0

Correlation Coefficient

EGPT  IShares MSCI

Pay attention - limited upside

The 3 months correlation between EGPT and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EGPT and iShares MSCI Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Israel and EGPT 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 EGPT 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 Israel has no effect on the direction of EGPT i.e., EGPT and IShares MSCI go up and down completely randomly.

Pair Corralation between EGPT and IShares MSCI

If you would invest  7,600  in iShares MSCI Israel on December 28, 2024 and sell it today you would earn a total of  13.00  from holding iShares MSCI Israel or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EGPT  vs.  iShares MSCI Israel

EGPT

Risk-Adjusted Performance

Very Weak

Over the last 90 days EGPT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EGPT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares MSCI Israel

Risk-Adjusted Performance

Weak

Over the last 90 days iShares MSCI Israel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, IShares MSCI 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 EGPT and IShares MSCI

The main advantage of trading using opposite EGPT and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGPT 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 EGPT and iShares MSCI Israel 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.