Correlation Between IShares MSCI and Vanguard High
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Vanguard High 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 Vanguard High 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 Vanguard High Dividend, you can compare the effects of market volatilities on IShares MSCI and Vanguard High 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 Vanguard High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Vanguard High.
Diversification Opportunities for IShares MSCI and Vanguard High
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Vanguard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Vanguard High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Dividend 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 Vanguard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Dividend has no effect on the direction of IShares MSCI i.e., IShares MSCI and Vanguard High go up and down completely randomly.
Pair Corralation between IShares MSCI and Vanguard High
Given the investment horizon of 90 days iShares MSCI China is expected to generate 1.9 times more return on investment than Vanguard High. However, IShares MSCI is 1.9 times more volatile than Vanguard High Dividend. It trades about 0.2 of its potential returns per unit of risk. Vanguard High Dividend is currently generating about -0.22 per unit of risk. If you would invest 4,038 in iShares MSCI China on January 29, 2024 and sell it today you would earn a total of 197.00 from holding iShares MSCI China or generate 4.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
iShares MSCI China vs. Vanguard High Dividend
Performance |
Timeline |
iShares MSCI China |
Vanguard High Dividend |
IShares MSCI and Vanguard High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares MSCI and Vanguard High
The main advantage of trading using opposite IShares MSCI and Vanguard High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Vanguard High 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 Vanguard High will offset losses from the drop in Vanguard High'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 |
Vanguard High vs. PIMCO RAFI Dynamic | Vanguard High vs. PIMCO RAFI Dynamic | Vanguard High vs. JPMorgan Diversified Return | Vanguard High vs. JPMorgan Diversified Return |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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