Correlation Between IShares MSCI and First Community

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

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

Diversification Opportunities for IShares MSCI and First Community

-0.51

Correlation Coefficient

IShares MSCI  First Community

Excellent diversification

The 3 months correlation between IShares and First is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Ireland and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community 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 Ireland are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of IShares MSCI i.e., IShares MSCI and First Community go up and down completely randomly.

Pair Corralation between IShares MSCI and First Community

Given the investment horizon of 90 days iShares MSCI Ireland is expected to generate 0.93 times more return on investment than First Community. However, iShares MSCI Ireland is 1.08 times less risky than First Community. It trades about 0.06 of its potential returns per unit of risk. First Community is currently generating about -0.01 per unit of risk. If you would invest  4,658  in iShares MSCI Ireland on January 24, 2024 and sell it today you would earn a total of  2,022  from holding iShares MSCI Ireland or generate 43.41% return on investment over 90 days.

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

iShares MSCI Ireland  vs.  First Community

iShares MSCI Ireland

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Ireland are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in May 2024.

First Community

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Community has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with IShares MSCI and First Community

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

The idea behind iShares MSCI Ireland and First Community 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.