Correlation Between IShares MSCI and Apple

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Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on IShares MSCI and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Apple.

Diversification Opportunities for IShares MSCI and Apple

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between IShares and Apple is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding IShares MSCI EAFE and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of IShares MSCI i.e., IShares MSCI and Apple go up and down completely randomly.

Pair Corralation between IShares MSCI and Apple

Given the investment horizon of 90 days IShares MSCI EAFE is expected to generate 0.49 times more return on investment than Apple. However, IShares MSCI EAFE is 2.04 times less risky than Apple. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.02 per unit of risk. If you would invest  6,628  in IShares MSCI EAFE on December 30, 2023 and sell it today you would earn a total of  460.00  from holding IShares MSCI EAFE or generate 6.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

IShares MSCI EAFE  vs.  Apple Inc

 Performance 
       Timeline  
IShares MSCI EAFE 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in IShares MSCI EAFE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Apple Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

IShares MSCI and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares MSCI and Apple

The main advantage of trading using opposite IShares MSCI and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind IShares MSCI EAFE and Apple Inc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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