Correlation Between Mairs Power and IShares MSCI

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

By analyzing existing cross correlation between Mairs Power Minnesota and iShares MSCI Global, you can compare the effects of market volatilities on Mairs Power and IShares MSCI 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 Mairs Power with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and IShares MSCI.

Diversification Opportunities for Mairs Power and IShares MSCI

0.5

Correlation Coefficient

Mairs Power  IShares MSCI

Very weak diversification

The 3 months correlation between Mairs and IShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Minnesota and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global and Mairs Power 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 Mairs Power Minnesota are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Global has no effect on the direction of Mairs Power i.e., Mairs Power and IShares MSCI go up and down completely randomly.

Pair Corralation between Mairs Power and IShares MSCI

Given the investment horizon of 90 days Mairs Power Minnesota is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Mairs Power Minnesota is 2.84 times less risky than IShares MSCI. The etf trades about -0.2 of its potential returns per unit of risk. The iShares MSCI Global is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,836  in iShares MSCI Global on January 31, 2024 and sell it today you would lose (91.00) from holding iShares MSCI Global or give up 1.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mairs Power Minnesota  vs.  iShares MSCI Global

Mairs Power Minnesota

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mairs Power Minnesota has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mairs Power is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

iShares MSCI Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mairs Power and IShares MSCI

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

The idea behind Mairs Power Minnesota and iShares MSCI Global 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.