Correlation Between IShares MSCI and Virtus WMC
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Virtus WMC 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 Virtus WMC 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 Virtus WMC International, you can compare the effects of market volatilities on IShares MSCI and Virtus WMC 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 Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Virtus WMC.
Diversification Opportunities for IShares MSCI and Virtus WMC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Virtus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International 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 Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of IShares MSCI i.e., IShares MSCI and Virtus WMC go up and down completely randomly.
Pair Corralation between IShares MSCI and Virtus WMC
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.06 times less return on investment than Virtus WMC. In addition to that, IShares MSCI is 2.5 times more volatile than Virtus WMC International. It trades about 0.03 of its total potential returns per unit of risk. Virtus WMC International is currently generating about 0.08 per unit of volatility. If you would invest 2,206 in Virtus WMC International on December 4, 2024 and sell it today you would earn a total of 692.27 from holding Virtus WMC International or generate 31.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares MSCI China vs. Virtus WMC International
Performance |
Timeline |
iShares MSCI China |
Virtus WMC International |
IShares MSCI and Virtus WMC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares MSCI and Virtus WMC
The main advantage of trading using opposite IShares MSCI and Virtus WMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Virtus WMC 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 Virtus WMC will offset losses from the drop in Virtus WMC's long position.IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
Virtus WMC vs. Strategy Shares | Virtus WMC vs. Freedom Day Dividend | Virtus WMC vs. Franklin Templeton ETF | Virtus WMC vs. iShares MSCI China |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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