Correlation Between IShares MSCI and Mast Global

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

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

Diversification Opportunities for IShares MSCI and Mast Global

0.42

Correlation Coefficient

IShares MSCI  Mast Global

Very weak diversification

The 3 months correlation between IShares and Mast is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Mast Global Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mast Global Battery 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 China are associated (or correlated) with Mast Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mast Global Battery has no effect on the direction of IShares MSCI i.e., IShares MSCI and Mast Global go up and down completely randomly.

Pair Corralation between IShares MSCI and Mast Global

Given the investment horizon of 90 days iShares MSCI China is expected to generate 1.65 times more return on investment than Mast Global. However, IShares MSCI is 1.65 times more volatile than Mast Global Battery. It trades about 0.13 of its potential returns per unit of risk. Mast Global Battery is currently generating about -0.04 per unit of risk. If you would invest  4,649  in iShares MSCI China on December 1, 2024 and sell it today you would earn a total of  709.00  from holding iShares MSCI China or generate 15.25% return on investment over 90 days.

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

iShares MSCI China  vs.  Mast Global Battery

iShares MSCI China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mast Global Battery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mast Global Battery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mast Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares MSCI and Mast Global

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

The idea behind iShares MSCI China and Mast Global Battery 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.