Correlation Between IShares MSCI and BetaPro SPTSX

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and BetaPro SPTSX 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 BetaPro SPTSX 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 BetaPro SPTSX 60, you can compare the effects of market volatilities on IShares MSCI and BetaPro SPTSX 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 BetaPro SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and BetaPro SPTSX.

Diversification Opportunities for IShares MSCI and BetaPro SPTSX

0.25

Correlation Coefficient

IShares MSCI  BetaPro SPTSX

Modest diversification

The 3 months correlation between IShares and BetaPro is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and BetaPro SPTSX 60 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SPTSX 60 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 BetaPro SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SPTSX 60 has no effect on the direction of IShares MSCI i.e., IShares MSCI and BetaPro SPTSX go up and down completely randomly.

Pair Corralation between IShares MSCI and BetaPro SPTSX

Assuming the 90 days trading horizon iShares MSCI USA is expected to generate 0.55 times more return on investment than BetaPro SPTSX. However, iShares MSCI USA is 1.81 times less risky than BetaPro SPTSX. It trades about 0.0 of its potential returns per unit of risk. BetaPro SPTSX 60 is currently generating about -0.13 per unit of risk. If you would invest  4,296  in iShares MSCI USA on September 11, 2025 and sell it today you would lose (2.00) from holding iShares MSCI USA or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

iShares MSCI USA  vs.  BetaPro SPTSX 60

iShares MSCI USA

Risk-Adjusted Performance

Weakest

Over the last 90 days iShares MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BetaPro SPTSX 60

Risk-Adjusted Performance

Weakest

Over the last 90 days BetaPro SPTSX 60 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares MSCI and BetaPro SPTSX

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

The idea behind iShares MSCI USA and BetaPro SPTSX 60 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 Transaction History module to view history of all your transactions and understand their impact on performance.