Correlation Between Legal General and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Legal General 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 Legal General and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General UCITS and iShares MSCI World, you can compare the effects of market volatilities on Legal General 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 Legal General with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and IShares MSCI.
Diversification Opportunities for Legal General and IShares MSCI
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Legal and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Legal General UCITS and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World and Legal General 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 Legal General UCITS 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 World has no effect on the direction of Legal General i.e., Legal General and IShares MSCI go up and down completely randomly.
Pair Corralation between Legal General and IShares MSCI
Assuming the 90 days trading horizon Legal General UCITS is expected to generate 1.3 times more return on investment than IShares MSCI. However, Legal General is 1.3 times more volatile than iShares MSCI World. It trades about 0.02 of its potential returns per unit of risk. iShares MSCI World is currently generating about -0.32 per unit of risk. If you would invest 1,614 in Legal General UCITS on September 25, 2024 and sell it today you would earn a total of 6.00 from holding Legal General UCITS or generate 0.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Legal General UCITS vs. iShares MSCI World
Performance |
Timeline |
Legal General UCITS |
iShares MSCI World |
Legal General and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legal General and IShares MSCI
The main advantage of trading using opposite Legal General and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General 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.Legal General vs. iShares Core MSCI | Legal General vs. iShares Core MSCI | Legal General vs. iShares MSCI World | Legal General vs. iShares MSCI EM |
IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares MSCI World | IShares MSCI vs. iShares MSCI EM |
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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