Correlation Between IShares MSCI and Main Sector

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

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

Diversification Opportunities for IShares MSCI and Main Sector

0.51

Correlation Coefficient

IShares MSCI  Main Sector

Very weak diversification

The 3 months correlation between IShares and Main is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and Main Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Sector Rotation 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 USA are associated (or correlated) with Main Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Sector Rotation has no effect on the direction of IShares MSCI i.e., IShares MSCI and Main Sector go up and down completely randomly.

Pair Corralation between IShares MSCI and Main Sector

Given the investment horizon of 90 days iShares MSCI USA is expected to under-perform the Main Sector. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI USA is 1.25 times less risky than Main Sector. The etf trades about -0.09 of its potential returns per unit of risk. The Main Sector Rotation is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  6,043  in Main Sector Rotation on August 5, 2025 and sell it today you would earn a total of  407.00  from holding Main Sector Rotation or generate 6.74% return on investment over 90 days.

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

iShares MSCI USA  vs.  Main Sector Rotation

iShares MSCI USA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Main Sector Rotation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Sector Rotation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Main Sector may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with IShares MSCI and Main Sector

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

The idea behind iShares MSCI USA and Main Sector Rotation 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.