Correlation Between IShares MSCI and 1WO

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and 1WO 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 1WO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares MSCI Denmark and 1WO, you can compare the effects of market volatilities on IShares MSCI and 1WO 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 1WO. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and 1WO.

Diversification Opportunities for IShares MSCI and 1WO

-0.74

Correlation Coefficient

IShares MSCI  1WO

Pay attention - limited upside

The 3 months correlation between IShares and 1WO is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Denmark and 1WO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1WO 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 Denmark are associated (or correlated) with 1WO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1WO has no effect on the direction of IShares MSCI i.e., IShares MSCI and 1WO go up and down completely randomly.

Pair Corralation between IShares MSCI and 1WO

If you would invest  11,297  in iShares MSCI Denmark on January 25, 2024 and sell it today you would earn a total of  593.00  from holding iShares MSCI Denmark or generate 5.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

iShares MSCI Denmark  vs.  1WO

iShares MSCI Denmark

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Denmark are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

1WO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1WO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, 1WO is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares MSCI and 1WO

The main advantage of trading using opposite IShares MSCI and 1WO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, 1WO 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 1WO will offset losses from the drop in 1WO's long position.

The idea behind iShares MSCI Denmark and 1WO 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.