Correlation Between IShares MSCI and Invesco India

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

By analyzing existing cross correlation between iShares MSCI Thailand and Invesco India ETF, you can compare the effects of market volatilities on IShares MSCI and Invesco India 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 Invesco India. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Invesco India.

Diversification Opportunities for IShares MSCI and Invesco India

0.82

Correlation Coefficient

IShares MSCI  Invesco India

Very poor diversification

The 3 months correlation between IShares and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Thailand and Invesco India ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco India ETF 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 Thailand are associated (or correlated) with Invesco India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco India ETF has no effect on the direction of IShares MSCI i.e., IShares MSCI and Invesco India go up and down completely randomly.

Pair Corralation between IShares MSCI and Invesco India

Considering the 90-day investment horizon iShares MSCI Thailand is expected to under-perform the Invesco India. In addition to that, IShares MSCI is 1.1 times more volatile than Invesco India ETF. It trades about -0.01 of its total potential returns per unit of risk. Invesco India ETF is currently generating about 0.31 per unit of volatility. If you would invest  2,799  in Invesco India ETF on September 18, 2024 and sell it today you would earn a total of  128.00  from holding Invesco India ETF or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares MSCI Thailand  vs.  Invesco India ETF

iShares MSCI Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco India ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco India ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Invesco India is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares MSCI and Invesco India

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

The idea behind iShares MSCI Thailand and Invesco India ETF 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.