Correlation Between Guardian and IShares MSCI

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

By analyzing existing cross correlation between Guardian i3 Global and iShares MSCI World, you can compare the effects of market volatilities on Guardian 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 Guardian with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian and IShares MSCI.

Diversification Opportunities for Guardian and IShares MSCI

0.89

Correlation Coefficient

Guardian  IShares MSCI

Very poor diversification

The 3 months correlation between Guardian and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Guardian i3 Global and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World and Guardian 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 Guardian i3 Global 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 World has no effect on the direction of Guardian i.e., Guardian and IShares MSCI go up and down completely randomly.

Pair Corralation between Guardian and IShares MSCI

Assuming the 90 days trading horizon Guardian i3 Global is expected to generate 1.54 times more return on investment than IShares MSCI. However, Guardian is 1.54 times more volatile than iShares MSCI World. It trades about 0.12 of its potential returns per unit of risk. iShares MSCI World is currently generating about 0.14 per unit of risk. If you would invest  1,734  in Guardian i3 Global on September 22, 2024 and sell it today you would earn a total of  1,284  from holding Guardian i3 Global or generate 74.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Guardian i3 Global  vs.  iShares MSCI World

Guardian i3 Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian i3 Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Guardian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares MSCI World

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI World are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardian and IShares MSCI

The main advantage of trading using opposite Guardian and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian 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 Guardian i3 Global and iShares MSCI World 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.