Correlation Between IShares TecDAX and IShares MSCI

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

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

Diversification Opportunities for IShares TecDAX and IShares MSCI

-0.58

Correlation Coefficient

IShares TecDAX  IShares MSCI

Excellent diversification

The 3 months correlation between IShares and IShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares TecDAX UCITS and iShares MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Brazil and IShares TecDAX 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 TecDAX UCITS 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 Brazil has no effect on the direction of IShares TecDAX i.e., IShares TecDAX and IShares MSCI go up and down completely randomly.

Pair Corralation between IShares TecDAX and IShares MSCI

Assuming the 90 days trading horizon iShares TecDAX UCITS is expected to generate 0.59 times more return on investment than IShares MSCI. However, iShares TecDAX UCITS is 1.68 times less risky than IShares MSCI. It trades about 0.02 of its potential returns per unit of risk. iShares MSCI Brazil is currently generating about -0.01 per unit of risk. If you would invest  2,877  in iShares TecDAX UCITS on October 9, 2024 and sell it today you would earn a total of  138.00  from holding iShares TecDAX UCITS or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.36%
Values	Daily Returns

iShares TecDAX UCITS  vs.  iShares MSCI Brazil

iShares TecDAX UCITS

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days iShares TecDAX UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares TecDAX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares MSCI Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with IShares TecDAX and IShares MSCI

The main advantage of trading using opposite IShares TecDAX and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares TecDAX 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 iShares TecDAX UCITS and iShares MSCI Brazil 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 Transaction History module to view history of all your transactions and understand their impact on performance.