Correlation Between IShares MSCI and FLIY

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

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

Diversification Opportunities for IShares MSCI and FLIY

0.55

Correlation Coefficient

IShares MSCI  FLIY

Very weak diversification

The 3 months correlation between IShares and FLIY is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Turkey and FLIY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLIY 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 Turkey are associated (or correlated) with FLIY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLIY has no effect on the direction of IShares MSCI i.e., IShares MSCI and FLIY go up and down completely randomly.

Pair Corralation between IShares MSCI and FLIY

Considering the 90-day investment horizon IShares MSCI is expected to generate 3.21 times less return on investment than FLIY. In addition to that, IShares MSCI is 1.64 times more volatile than FLIY. It trades about 0.02 of its total potential returns per unit of risk. FLIY is currently generating about 0.1 per unit of volatility. If you would invest  2,362  in FLIY on October 8, 2024 and sell it today you would earn a total of  384.00  from holding FLIY or generate 16.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	26.41%
Values	Daily Returns

iShares MSCI Turkey  vs.  FLIY

iShares MSCI Turkey

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Turkey are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FLIY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLIY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, FLIY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares MSCI and FLIY

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

The idea behind iShares MSCI Turkey and FLIY 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.