Correlation Between IShares MSCI and BetaShares Global

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

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

Diversification Opportunities for IShares MSCI and BetaShares Global

0.0

Correlation Coefficient

IShares MSCI  BetaShares Global

Pay attention - limited upside

The 3 months correlation between IShares and BetaShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and BetaShares Global Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Global Banks 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 Emerging are associated (or correlated) with BetaShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Global Banks has no effect on the direction of IShares MSCI i.e., IShares MSCI and BetaShares Global go up and down completely randomly.

Pair Corralation between IShares MSCI and BetaShares Global

Assuming the 90 days trading horizon iShares MSCI Emerging is expected to generate 0.78 times more return on investment than BetaShares Global. However, iShares MSCI Emerging is 1.29 times less risky than BetaShares Global. It trades about 0.27 of its potential returns per unit of risk. BetaShares Global Banks is currently generating about -0.15 per unit of risk. If you would invest  6,630  in iShares MSCI Emerging on September 24, 2024 and sell it today you would earn a total of  236.00  from holding iShares MSCI Emerging or generate 3.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

iShares MSCI Emerging  vs.  BetaShares Global Banks

iShares MSCI Emerging

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Emerging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, IShares MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Global Banks

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Global Banks are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares MSCI and BetaShares Global

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

The idea behind iShares MSCI Emerging and BetaShares Global Banks 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.