Correlation Between IShares MSCI and IShares SMI

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

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

Diversification Opportunities for IShares MSCI and IShares SMI

-0.67

Correlation Coefficient

IShares MSCI  IShares SMI

Excellent diversification

The 3 months correlation between IShares and IShares is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and iShares SMI ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SMI 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 Global are associated (or correlated) with IShares SMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SMI ETF has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares SMI go up and down completely randomly.

Pair Corralation between IShares MSCI and IShares SMI

Assuming the 90 days trading horizon iShares MSCI Global is expected to generate 2.28 times more return on investment than IShares SMI. However, IShares MSCI is 2.28 times more volatile than iShares SMI ETF. It trades about 0.16 of its potential returns per unit of risk. iShares SMI ETF is currently generating about -0.07 per unit of risk. If you would invest  734.00  in iShares MSCI Global on May 13, 2025 and sell it today you would earn a total of  102.00  from holding iShares MSCI Global or generate 13.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares MSCI Global  vs.  iShares SMI ETF

iShares MSCI Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, IShares MSCI showed solid returns over the last few months and may actually be approaching a breakup point.

iShares SMI ETF

Risk-Adjusted Performance

Weakest

Over the last 90 days iShares SMI ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares SMI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares MSCI and IShares SMI

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

The idea behind iShares MSCI Global and iShares SMI 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.