Correlation Between IXSE and IShares MSCI

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

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

Diversification Opportunities for IXSE and IShares MSCI

-0.54

Correlation Coefficient

IXSE  IShares MSCI

Excellent diversification

The 3 months correlation between IXSE and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding IXSE and iShares MSCI India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI India and IXSE 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 IXSE 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 India has no effect on the direction of IXSE i.e., IXSE and IShares MSCI go up and down completely randomly.

Pair Corralation between IXSE and IShares MSCI

If you would invest  7,888  in iShares MSCI India on September 17, 2024 and sell it today you would earn a total of  517.00  from holding iShares MSCI India or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

IXSE  vs.  iShares MSCI India

IXSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IXSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IXSE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares MSCI India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IXSE and IShares MSCI

The main advantage of trading using opposite IXSE and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IXSE 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 IXSE and iShares MSCI India 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.