Correlation Between IShares MSCI and Inspire Global

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

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

Diversification Opportunities for IShares MSCI and Inspire Global

0.46

Correlation Coefficient

IShares MSCI  Inspire Global

Very weak diversification

The 3 months correlation between IShares and Inspire is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI World and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope 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 World are associated (or correlated) with Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of IShares MSCI i.e., IShares MSCI and Inspire Global go up and down completely randomly.

Pair Corralation between IShares MSCI and Inspire Global

Given the investment horizon of 90 days iShares MSCI World is expected to generate 0.89 times more return on investment than Inspire Global. However, iShares MSCI World is 1.13 times less risky than Inspire Global. It trades about 0.11 of its potential returns per unit of risk. Inspire Global Hope is currently generating about 0.06 per unit of risk. If you would invest  11,143  in iShares MSCI World on September 17, 2024 and sell it today you would earn a total of  5,037  from holding iShares MSCI World or generate 45.2% return on investment over 90 days.

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

iShares MSCI World  vs.  Inspire Global Hope

iShares MSCI World

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI World are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares MSCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Inspire Global Hope

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspire Global Hope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Inspire Global is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares MSCI and Inspire Global

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

The idea behind iShares MSCI World and Inspire Global Hope 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.