Correlation Between Virtus WMC and IShares MSCI

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

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

Diversification Opportunities for Virtus WMC and IShares MSCI

0.76

Correlation Coefficient

Virtus WMC  IShares MSCI

Poor diversification

The 3 months correlation between Virtus and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Virtus WMC International 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 Virtus WMC 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 Virtus WMC International 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 Virtus WMC i.e., Virtus WMC and IShares MSCI go up and down completely randomly.

Pair Corralation between Virtus WMC and IShares MSCI

Given the investment horizon of 90 days Virtus WMC International is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Virtus WMC International is 3.41 times less risky than IShares MSCI. The etf trades about -0.21 of its potential returns per unit of risk. The iShares MSCI China is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,691  in iShares MSCI China on October 7, 2024 and sell it today you would lose (52.00) from holding iShares MSCI China or give up 1.11% of portfolio value over 90 days.

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

Virtus WMC International  vs.  iShares MSCI China

Virtus WMC International

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares MSCI China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pair Trading with Virtus WMC and IShares MSCI

The main advantage of trading using opposite Virtus WMC and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus WMC 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 Virtus WMC International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.