Correlation Between IShares MSCI and Ford
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Ford 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 Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI China and Ford Motor, you can compare the effects of market volatilities on IShares MSCI and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Ford.
Diversification Opportunities for IShares MSCI and Ford
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Ford is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 China are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of IShares MSCI i.e., IShares MSCI and Ford go up and down completely randomly.
Pair Corralation between IShares MSCI and Ford
Given the investment horizon of 90 days iShares MSCI China is expected to under-perform the Ford. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI China is 1.32 times less risky than Ford. The etf trades about -0.02 of its potential returns per unit of risk. The Ford Motor is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,182 in Ford Motor on January 20, 2024 and sell it today you would earn a total of 24.00 from holding Ford Motor or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI China vs. Ford Motor
Performance |
| Timeline |
| iShares MSCI China |
| Ford Motor |
IShares MSCI and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Ford
The main advantage of trading using opposite IShares MSCI and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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