Correlation Between Stance Equity and IShares MSCI

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

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

Diversification Opportunities for Stance Equity and IShares MSCI

0.83

Correlation Coefficient

Stance Equity  IShares MSCI

Very poor diversification

The 3 months correlation between Stance and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Stance Equity ESG and iShares MSCI Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Intl and Stance Equity 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 Stance Equity ESG 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 Intl has no effect on the direction of Stance Equity i.e., Stance Equity and IShares MSCI go up and down completely randomly.

Pair Corralation between Stance Equity and IShares MSCI

Given the investment horizon of 90 days Stance Equity ESG is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Stance Equity ESG is 1.45 times less risky than IShares MSCI. The etf trades about -0.05 of its potential returns per unit of risk. The iShares MSCI Intl is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,859  in iShares MSCI Intl on February 11, 2024 and sell it today you would earn a total of  5.00  from holding iShares MSCI Intl or generate 0.13% return on investment over 90 days.

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

Stance Equity ESG  vs.  iShares MSCI Intl

Stance Equity ESG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stance Equity ESG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Stance Equity is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares MSCI Intl

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Intl are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Stance Equity and IShares MSCI

The main advantage of trading using opposite Stance Equity and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stance Equity 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 Stance Equity ESG and iShares MSCI Intl 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.