Correlation Between IShares MSCI and Formidable ETF

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

By analyzing existing cross correlation between iShares MSCI Pacific and Formidable ETF, you can compare the effects of market volatilities on IShares MSCI and Formidable ETF 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 Formidable ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Formidable ETF.

Diversification Opportunities for IShares MSCI and Formidable ETF

0.78

Correlation Coefficient

IShares MSCI  Formidable ETF

Poor diversification

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

Pair Corralation between IShares MSCI and Formidable ETF

Considering the 90-day investment horizon iShares MSCI Pacific is expected to generate 1.07 times more return on investment than Formidable ETF. However, IShares MSCI is 1.07 times more volatile than Formidable ETF. It trades about 0.19 of its potential returns per unit of risk. Formidable ETF is currently generating about 0.09 per unit of risk. If you would invest  4,725  in iShares MSCI Pacific on May 17, 2025 and sell it today you would earn a total of  383.00  from holding iShares MSCI Pacific or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

iShares MSCI Pacific  vs.  Formidable ETF

iShares MSCI Pacific

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Pacific are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Formidable ETF

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares MSCI and Formidable ETF

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

The idea behind iShares MSCI Pacific and Formidable ETF 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.