Correlation Between Deka MSCI and IShares Nikkei
Can any of the company-specific risk be diversified away by investing in both Deka MSCI and IShares Nikkei 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 Deka MSCI and IShares Nikkei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deka MSCI World and iShares Nikkei 225, you can compare the effects of market volatilities on Deka MSCI and IShares Nikkei 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 Deka MSCI with a short position of IShares Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deka MSCI and IShares Nikkei.
Diversification Opportunities for Deka MSCI and IShares Nikkei
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Deka and IShares is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Deka MSCI World and iShares Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nikkei 225 and Deka 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 Deka MSCI World are associated (or correlated) with IShares Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nikkei 225 has no effect on the direction of Deka MSCI i.e., Deka MSCI and IShares Nikkei go up and down completely randomly.
Pair Corralation between Deka MSCI and IShares Nikkei
Assuming the 90 days trading horizon Deka MSCI World is expected to under-perform the IShares Nikkei. But the etf apears to be less risky and, when comparing its historical volatility, Deka MSCI World is 2.31 times less risky than IShares Nikkei. The etf trades about -0.06 of its potential returns per unit of risk. The iShares Nikkei 225 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,334 in iShares Nikkei 225 on September 26, 2024 and sell it today you would earn a total of 58.00 from holding iShares Nikkei 225 or generate 2.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Deka MSCI World vs. iShares Nikkei 225
Performance |
Timeline |
Deka MSCI World |
iShares Nikkei 225 |
Deka MSCI and IShares Nikkei Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Deka MSCI and IShares Nikkei
The main advantage of trading using opposite Deka MSCI and IShares Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deka MSCI position performs unexpectedly, IShares Nikkei 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 Nikkei will offset losses from the drop in IShares Nikkei's long position.Deka MSCI vs. UBS Fund Solutions | Deka MSCI vs. Xtrackers II | Deka MSCI vs. Xtrackers Nikkei 225 | Deka MSCI vs. iShares VII PLC |
IShares Nikkei vs. UBS Fund Solutions | IShares Nikkei vs. Xtrackers II | IShares Nikkei vs. Xtrackers Nikkei 225 | IShares Nikkei vs. iShares VII PLC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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