Correlation Between IShares MSCI and Intel

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

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

Diversification Opportunities for IShares MSCI and Intel

-0.35

Correlation Coefficient

IShares MSCI  Intel

Very good diversification

The 3 months correlation between IShares and Intel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 EAFE are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of IShares MSCI i.e., IShares MSCI and Intel go up and down completely randomly.

Pair Corralation between IShares MSCI and Intel

Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 0.29 times more return on investment than Intel. However, iShares MSCI EAFE is 3.5 times less risky than Intel. It trades about -0.18 of its potential returns per unit of risk. Intel is currently generating about -0.29 per unit of risk. If you would invest  6,248  in iShares MSCI EAFE on January 19, 2024 and sell it today you would lose (189.00) from holding iShares MSCI EAFE or give up 3.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

iShares MSCI EAFE  vs.  Intel

iShares MSCI EAFE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI EAFE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with IShares MSCI and Intel

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

The idea behind iShares MSCI EAFE and Intel 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.