Correlation Between Wex and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Wex 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 Wex and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wex Inc and iShares MSCI Global, you can compare the effects of market volatilities on Wex 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 Wex with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wex and IShares MSCI.
Diversification Opportunities for Wex and IShares MSCI
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wex and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc 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 Wex 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 Wex Inc 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 Wex i.e., Wex and IShares MSCI go up and down completely randomly.
Pair Corralation between Wex and IShares MSCI
Considering the 90-day investment horizon Wex Inc is expected to generate 1.14 times more return on investment than IShares MSCI. However, Wex is 1.14 times more volatile than iShares MSCI Global. It trades about -0.12 of its potential returns per unit of risk. iShares MSCI Global is currently generating about -0.28 per unit of risk. If you would invest 23,599 in Wex Inc on January 20, 2024 and sell it today you would lose (609.00) from holding Wex Inc or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wex Inc vs. iShares MSCI Global
Performance |
| Timeline |
| Wex Inc |
| iShares MSCI Global |
Wex and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wex and IShares MSCI
The main advantage of trading using opposite Wex and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wex 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 Wex Inc 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.| IShares MSCI vs. SHP ETF Trust | IShares MSCI vs. Global X SP | IShares MSCI vs. Kngt Clb Eqy | IShares MSCI vs. Mairs Power Minnesota |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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