Correlation Between IShares MSCI and BCULC

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and BCULC 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 BCULC 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 BCULC 35 15 FEB 29, you can compare the effects of market volatilities on IShares MSCI and BCULC 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 BCULC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and BCULC.

Diversification Opportunities for IShares MSCI and BCULC

-0.58

Correlation Coefficient

IShares MSCI  BCULC

Excellent diversification

The 3 months correlation between IShares and BCULC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and BCULC 35 15 FEB 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCULC 35 15 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 BCULC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCULC 35 15 has no effect on the direction of IShares MSCI i.e., IShares MSCI and BCULC go up and down completely randomly.

Pair Corralation between IShares MSCI and BCULC

Given the investment horizon of 90 days IShares MSCI is expected to generate 3.14 times less return on investment than BCULC. In addition to that, IShares MSCI is 1.71 times more volatile than BCULC 35 15 FEB 29. It trades about 0.01 of its total potential returns per unit of risk. BCULC 35 15 FEB 29 is currently generating about 0.03 per unit of volatility. If you would invest  8,838  in BCULC 35 15 FEB 29 on September 27, 2024 and sell it today you would earn a total of  312.00  from holding BCULC 35 15 FEB 29 or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.16%
Values	Daily Returns

iShares MSCI China  vs.  BCULC 35 15 FEB 29

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

BCULC 35 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCULC 35 15 FEB 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BCULC 35 15 FEB 29 investors.

Pair Trading with IShares MSCI and BCULC

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

The idea behind iShares MSCI China and BCULC 35 15 FEB 29 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.