Correlation Between IShares MSCI and Schwab International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Schwab International 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 International 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 International Equity, you can compare the effects of market volatilities on IShares MSCI and Schwab International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Schwab International.
Diversification Opportunities for IShares MSCI and Schwab International
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Schwab is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Schwab International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of IShares MSCI i.e., IShares MSCI and Schwab International go up and down completely randomly.
Pair Corralation between IShares MSCI and Schwab International
Considering the 90-day investment horizon IShares MSCI is expected to generate 1.03 times less return on investment than Schwab International. But when comparing it to its historical volatility, iShares MSCI EAFE is 1.0 times less risky than Schwab International. It trades about 0.05 of its potential returns per unit of risk. Schwab International Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,487 in Schwab International Equity on January 31, 2024 and sell it today you would earn a total of 333.00 from holding Schwab International Equity or generate 9.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.6% |
Values | Daily Returns |
iShares MSCI EAFE vs. Schwab International Equity
Performance |
Timeline |
iShares MSCI EAFE |
Schwab International |
IShares MSCI and Schwab International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares MSCI and Schwab International
The main advantage of trading using opposite IShares MSCI and Schwab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Schwab International 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 International will offset losses from the drop in Schwab International's long position.IShares MSCI vs. Invesco PureBeta MSCI | IShares MSCI vs. HUMANA INC | IShares MSCI vs. Aquagold International | IShares MSCI vs. Barloworld Ltd ADR |
Schwab International vs. Invesco PureBeta MSCI | Schwab International vs. HUMANA INC | Schwab International vs. Aquagold International | Schwab International vs. Barloworld Ltd ADR |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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