Correlation Between IShares MSCI and Genmab AS

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

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

Diversification Opportunities for IShares MSCI and Genmab AS

-0.4

Correlation Coefficient

IShares MSCI  Genmab AS

Very good diversification

The 3 months correlation between IShares and Genmab is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Brazil and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS 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 Brazil are associated (or correlated) with Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of IShares MSCI i.e., IShares MSCI and Genmab AS go up and down completely randomly.

Pair Corralation between IShares MSCI and Genmab AS

Considering the 90-day investment horizon iShares MSCI Brazil is expected to under-perform the Genmab AS. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Brazil is 1.14 times less risky than Genmab AS. The etf trades about -0.2 of its potential returns per unit of risk. The Genmab AS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  202,400  in Genmab AS on January 19, 2024 and sell it today you would lose (1,700) from holding Genmab AS or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.96%
Values	Daily Returns

iShares MSCI Brazil  vs.  Genmab AS

iShares MSCI Brazil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Brazil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Genmab AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genmab AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Genmab AS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares MSCI and Genmab AS

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

The idea behind iShares MSCI Brazil and Genmab AS 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.