Correlation Between IShares MSCI and Rize Global

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

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

Diversification Opportunities for IShares MSCI and Rize Global

0.92

Correlation Coefficient

IShares MSCI  Rize Global

Almost no diversification

The 3 months correlation between IShares and Rize is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Europe and Rize Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rize Global Sustainable 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 Europe are associated (or correlated) with Rize Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rize Global Sustainable has no effect on the direction of IShares MSCI i.e., IShares MSCI and Rize Global go up and down completely randomly.

Pair Corralation between IShares MSCI and Rize Global

Assuming the 90 days trading horizon iShares MSCI Europe is expected to generate 1.64 times more return on investment than Rize Global. However, IShares MSCI is 1.64 times more volatile than Rize Global Sustainable. It trades about 0.27 of its potential returns per unit of risk. Rize Global Sustainable is currently generating about 0.24 per unit of risk. If you would invest  625.00  in iShares MSCI Europe on April 24, 2025 and sell it today you would earn a total of  102.00  from holding iShares MSCI Europe or generate 16.32% 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 Europe  vs.  Rize Global Sustainable

iShares MSCI Europe

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Europe are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rize Global Sustainable

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rize Global Sustainable are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Rize Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares MSCI and Rize Global

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

The idea behind iShares MSCI Europe and Rize Global Sustainable 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.