Correlation Between IShares MSCI and CHII

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

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

Diversification Opportunities for IShares MSCI and CHII

0.56

Correlation Coefficient

IShares MSCI  CHII

Very weak diversification

The 3 months correlation between IShares and CHII is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Hong and CHII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHII 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 Hong are associated (or correlated) with CHII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHII has no effect on the direction of IShares MSCI i.e., IShares MSCI and CHII go up and down completely randomly.

Pair Corralation between IShares MSCI and CHII

Considering the 90-day investment horizon iShares MSCI Hong is expected to under-perform the CHII. In addition to that, IShares MSCI is 1.24 times more volatile than CHII. It trades about -0.02 of its total potential returns per unit of risk. CHII is currently generating about -0.02 per unit of volatility. If you would invest  1,275  in CHII on September 22, 2024 and sell it today you would lose (51.00) from holding CHII or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.17%
Values	Daily Returns

iShares MSCI Hong  vs.  CHII

iShares MSCI Hong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Hong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares MSCI is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

CHII

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHII has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, CHII is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares MSCI and CHII

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

The idea behind iShares MSCI Hong and CHII 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.