Correlation Between European Equity and IHIT
Can any of the company-specific risk be diversified away by investing in both European Equity and IHIT 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 European Equity and IHIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Equity Closed and IHIT, you can compare the effects of market volatilities on European Equity and IHIT 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 European Equity with a short position of IHIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Equity and IHIT.
Diversification Opportunities for European Equity and IHIT
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between European and IHIT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and IHIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHIT and European Equity 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 European Equity Closed are associated (or correlated) with IHIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHIT has no effect on the direction of European Equity i.e., European Equity and IHIT go up and down completely randomly.
Pair Corralation between European Equity and IHIT
If you would invest 850.00 in European Equity Closed on January 11, 2025 and sell it today you would earn a total of 0.00 from holding European Equity Closed or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
European Equity Closed vs. IHIT
Performance |
| Timeline |
| European Equity Closed |
| IHIT |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
European Equity and IHIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Equity and IHIT
The main advantage of trading using opposite European Equity and IHIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Equity position performs unexpectedly, IHIT 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 IHIT will offset losses from the drop in IHIT's long position.| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Western Asset High |
| IHIT vs. MFS Investment Grade | IHIT vs. Eaton Vance National | IHIT vs. Nuveen California Select | IHIT vs. Federated Premier Municipal |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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