Correlation Between IShares MSCI and Evolve E

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

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

Diversification Opportunities for IShares MSCI and Evolve E

0.88

Correlation Coefficient

IShares MSCI  Evolve E

Very poor diversification

The 3 months correlation between IShares and Evolve is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI World and Evolve E Gaming Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve E Gaming 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 World are associated (or correlated) with Evolve E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve E Gaming has no effect on the direction of IShares MSCI i.e., IShares MSCI and Evolve E go up and down completely randomly.

Pair Corralation between IShares MSCI and Evolve E

Assuming the 90 days trading horizon IShares MSCI is expected to generate 1.66 times less return on investment than Evolve E. But when comparing it to its historical volatility, iShares MSCI World is 1.18 times less risky than Evolve E. It trades about 0.26 of its potential returns per unit of risk. Evolve E Gaming Index is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  3,815  in Evolve E Gaming Index on April 23, 2025 and sell it today you would earn a total of  862.00  from holding Evolve E Gaming Index or generate 22.6% return on investment over 90 days.

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

iShares MSCI World  vs.  Evolve E Gaming Index

iShares MSCI World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI World are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Evolve E Gaming

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve E Gaming Index are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve E displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and Evolve E

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

The idea behind iShares MSCI World and Evolve E Gaming 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.