Correlation Between IShares MSCI and MicroSectors FANG

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

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

Diversification Opportunities for IShares MSCI and MicroSectors FANG

-0.58

Correlation Coefficient

IShares MSCI  MicroSectors FANG

Excellent diversification

The 3 months correlation between IShares and MicroSectors is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index 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 China are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of IShares MSCI i.e., IShares MSCI and MicroSectors FANG go up and down completely randomly.

Pair Corralation between IShares MSCI and MicroSectors FANG

Given the investment horizon of 90 days IShares MSCI is expected to generate 360.4 times less return on investment than MicroSectors FANG. But when comparing it to its historical volatility, iShares MSCI China is 1.53 times less risky than MicroSectors FANG. It trades about 0.0 of its potential returns per unit of risk. MicroSectors FANG Index is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,858  in MicroSectors FANG Index on September 10, 2025 and sell it today you would earn a total of  84.00  from holding MicroSectors FANG Index or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.57%
Values	Daily Returns

iShares MSCI China  vs.  MicroSectors FANG Index

iShares MSCI China

Risk-Adjusted Performance

Weakest

Over the last 90 days iShares MSCI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, IShares MSCI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

MicroSectors FANG Index

Risk-Adjusted Performance

Fair

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak technical and fundamental indicators, MicroSectors FANG may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with IShares MSCI and MicroSectors FANG

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

The idea behind iShares MSCI China and MicroSectors FANG Index 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.