Correlation Between TCW Compounders and IShares Core

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

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

Diversification Opportunities for TCW Compounders and IShares Core

0.29

Correlation Coefficient

TCW Compounders  IShares Core

Modest diversification

The 3 months correlation between TCW and IShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding TCW Compounders ETF and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and TCW Compounders 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 TCW Compounders ETF are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of TCW Compounders i.e., TCW Compounders and IShares Core go up and down completely randomly.

Pair Corralation between TCW Compounders and IShares Core

Considering the 90-day investment horizon TCW Compounders is expected to generate 5.4 times less return on investment than IShares Core. In addition to that, TCW Compounders is 1.02 times more volatile than iShares Core MSCI. It trades about 0.02 of its total potential returns per unit of risk. iShares Core MSCI is currently generating about 0.13 per unit of volatility. If you would invest  7,150  in iShares Core MSCI on May 6, 2025 and sell it today you would earn a total of  422.00  from holding iShares Core MSCI or generate 5.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

TCW Compounders ETF  vs.  iShares Core MSCI

TCW Compounders ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days TCW Compounders ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, TCW Compounders is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Core MSCI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, IShares Core is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with TCW Compounders and IShares Core

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

The idea behind TCW Compounders ETF and iShares Core MSCI 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.