Correlation Between IShares MSCI and BlackRock Future

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

By analyzing existing cross correlation between iShares MSCI Europe and BlackRock Future Financial, you can compare the effects of market volatilities on IShares MSCI and BlackRock Future 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 BlackRock Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and BlackRock Future.

Diversification Opportunities for IShares MSCI and BlackRock Future

-0.55

Correlation Coefficient

IShares MSCI  BlackRock Future

Excellent diversification

The 3 months correlation between IShares and BlackRock is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Europe and BlackRock Future Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Future Fin 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 Europe are associated (or correlated) with BlackRock Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Future Fin has no effect on the direction of IShares MSCI i.e., IShares MSCI and BlackRock Future go up and down completely randomly.

Pair Corralation between IShares MSCI and BlackRock Future

Given the investment horizon of 90 days iShares MSCI Europe is expected to generate 0.79 times more return on investment than BlackRock Future. However, iShares MSCI Europe is 1.27 times less risky than BlackRock Future. It trades about 0.29 of its potential returns per unit of risk. BlackRock Future Financial is currently generating about -0.08 per unit of risk. If you would invest  2,332  in iShares MSCI Europe on December 30, 2024 and sell it today you would earn a total of  553.00  from holding iShares MSCI Europe or generate 23.71% return on investment over 90 days.

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

iShares MSCI Europe  vs.  BlackRock Future Financial

iShares MSCI Europe

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Europe are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, IShares MSCI displayed solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Future Fin

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Future Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with IShares MSCI and BlackRock Future

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

The idea behind iShares MSCI Europe and BlackRock Future Financial 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.