Correlation Between IShares MSCI and IShares SP
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI ACWI and iShares SP 100, you can compare the effects of market volatilities on IShares MSCI and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares SP.
Diversification Opportunities for IShares MSCI and IShares SP
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI ACWI and iShares SP 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 100 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 ACWI are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 100 has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares SP go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares SP
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.23 times less return on investment than IShares SP. But when comparing it to its historical volatility, iShares MSCI ACWI is 1.12 times less risky than IShares SP. It trades about 0.12 of its potential returns per unit of risk. iShares SP 100 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 31,684 in iShares SP 100 on August 19, 2025 and sell it today you would earn a total of 2,188 from holding iShares SP 100 or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI ACWI vs. iShares SP 100
Performance |
| Timeline |
| iShares MSCI ACWI |
| iShares SP 100 |
IShares MSCI and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares SP
The main advantage of trading using opposite IShares MSCI and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares Core SP | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares Technology ETF |
| IShares SP vs. iShares Core SP | IShares SP vs. iShares Core SP | IShares SP vs. iShares Russell Mid Cap | IShares SP vs. Consumer Discretionary Select |
Check out your portfolio center.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.
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