Correlation Between IShares India and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares India 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 IShares India and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares India 50 and iShares MSCI China, you can compare the effects of market volatilities on IShares India 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 IShares India with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares India and IShares MSCI.
Diversification Opportunities for IShares India and IShares MSCI
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding iShares India 50 and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China and IShares India 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 India 50 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 China has no effect on the direction of IShares India i.e., IShares India and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares India and IShares MSCI
Given the investment horizon of 90 days iShares India 50 is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, iShares India 50 is 2.59 times less risky than IShares MSCI. The etf trades about -0.18 of its potential returns per unit of risk. The iShares MSCI China is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,896 in iShares MSCI China on October 20, 2024 and sell it today you would lose (275.00) from holding iShares MSCI China or give up 5.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares India 50 vs. iShares MSCI China
Performance |
Timeline |
iShares India 50 |
iShares MSCI China |
IShares India and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares India and IShares MSCI
The main advantage of trading using opposite IShares India and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares India 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.IShares India vs. iShares MSCI India | IShares India vs. Invesco India ETF | IShares India vs. iShares MSCI India | IShares India vs. WisdomTree India Earnings |
IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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