Correlation Between IShares MSCI and FT Vest

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and FT Vest 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 FT Vest 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 FT Vest Dow, you can compare the effects of market volatilities on IShares MSCI and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and FT Vest.

Diversification Opportunities for IShares MSCI and FT Vest

-0.53

Correlation Coefficient

IShares MSCI  FT Vest

Excellent diversification

The 3 months correlation between IShares and FDND is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Dow has no effect on the direction of IShares MSCI i.e., IShares MSCI and FT Vest go up and down completely randomly.

Pair Corralation between IShares MSCI and FT Vest

Given the investment horizon of 90 days iShares MSCI China is expected to under-perform the FT Vest. In addition to that, IShares MSCI is 1.35 times more volatile than FT Vest Dow. It trades about -0.12 of its total potential returns per unit of risk. FT Vest Dow is currently generating about 0.09 per unit of volatility. If you would invest  2,292  in FT Vest Dow on October 25, 2024 and sell it today you would earn a total of  34.00  from holding FT Vest Dow or generate 1.48% return on investment over 90 days.

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

iShares MSCI China  vs.  FT Vest Dow

iShares MSCI China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, IShares MSCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

FT Vest Dow

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Dow are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, FT Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and FT Vest

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

The idea behind iShares MSCI China and FT Vest Dow 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..