Correlation Between IShares MSCI and Inland Real

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

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

Diversification Opportunities for IShares MSCI and Inland Real

-0.55

Correlation Coefficient

IShares MSCI  Inland Real

Excellent diversification

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

Pair Corralation between IShares MSCI and Inland Real

Assuming the 90 days horizon IShares MSCI is expected to generate 166.52 times less return on investment than Inland Real. But when comparing it to its historical volatility, iShares MSCI is 186.83 times less risky than Inland Real. It trades about 0.22 of its potential returns per unit of risk. Inland Real Estateome is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Inland Real Estateome on October 11, 2024 and sell it today you would lose (30.00) from holding Inland Real Estateome or give up 2.73% of portfolio value over 90 days.

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

iShares MSCI  vs.  Inland Real Estateome

iShares MSCI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Inland Real Estateome

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inland Real Estateome are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Inland Real exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and Inland Real

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

The idea behind iShares MSCI and Inland Real Estateome 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..