Correlation Between Martin Currie and IShares MSCI

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

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

Diversification Opportunities for Martin Currie and IShares MSCI

0.77

Correlation Coefficient

Martin Currie  IShares MSCI

Poor diversification

The 3 months correlation between Martin and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Martin Currie Sustainable and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China and Martin Currie 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 Martin Currie Sustainable 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 China has no effect on the direction of Martin Currie i.e., Martin Currie and IShares MSCI go up and down completely randomly.

Pair Corralation between Martin Currie and IShares MSCI

Given the investment horizon of 90 days Martin Currie is expected to generate 3.67 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Martin Currie Sustainable is 1.82 times less risky than IShares MSCI. It trades about 0.07 of its potential returns per unit of risk. iShares MSCI China is currently generating about 0.13 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Martin Currie Sustainable  vs.  iShares MSCI China

Martin Currie Sustainable

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Currie Sustainable are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Martin Currie is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Martin Currie and IShares MSCI

The main advantage of trading using opposite Martin Currie and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Currie 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 Martin Currie Sustainable and iShares MSCI China 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..