Correlation Between IShares MSCI and Schwab Fundamental
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Schwab Fundamental 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 Schwab Fundamental 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 Schwab Fundamental International, you can compare the effects of market volatilities on IShares MSCI and Schwab Fundamental 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 Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Schwab Fundamental.
Diversification Opportunities for IShares MSCI and Schwab Fundamental
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Schwab is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Schwab Fundamental Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental 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 Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental has no effect on the direction of IShares MSCI i.e., IShares MSCI and Schwab Fundamental go up and down completely randomly.
Pair Corralation between IShares MSCI and Schwab Fundamental
Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 0.94 times more return on investment than Schwab Fundamental. However, iShares MSCI EAFE is 1.06 times less risky than Schwab Fundamental. It trades about -0.11 of its potential returns per unit of risk. Schwab Fundamental International is currently generating about -0.11 per unit of risk. If you would invest 6,244 in iShares MSCI EAFE on January 17, 2024 and sell it today you would lose (105.00) from holding iShares MSCI EAFE or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Schwab Fundamental Internation
Performance |
| Timeline |
| iShares MSCI EAFE |
| Schwab Fundamental |
IShares MSCI and Schwab Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Schwab Fundamental
The main advantage of trading using opposite IShares MSCI and Schwab Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Schwab Fundamental 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 Schwab Fundamental will offset losses from the drop in Schwab Fundamental's long position.| IShares MSCI vs. Schwab Emerging Markets | IShares MSCI vs. Schwab International Equity | IShares MSCI vs. Schwab Fundamental International | IShares MSCI vs. Schwab Fundamental International |
| Schwab Fundamental vs. Schwab Fundamental International | Schwab Fundamental vs. Schwab Fundamental Emerging | Schwab Fundamental vs. Schwab Fundamental Small | Schwab Fundamental vs. Schwab Fundamental Large |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |