Correlation Between IShares Core and Invesco EURO
Can any of the company-specific risk be diversified away by investing in both IShares Core and Invesco EURO 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 Core and Invesco EURO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Invesco EURO STOXX, you can compare the effects of market volatilities on IShares Core and Invesco EURO 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 Core with a short position of Invesco EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Invesco EURO.
Diversification Opportunities for IShares Core and Invesco EURO
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Invesco EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EURO STOXX and IShares Core 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 Core MSCI are associated (or correlated) with Invesco EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EURO STOXX has no effect on the direction of IShares Core i.e., IShares Core and Invesco EURO go up and down completely randomly.
Pair Corralation between IShares Core and Invesco EURO
Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 1.17 times more return on investment than Invesco EURO. However, IShares Core is 1.17 times more volatile than Invesco EURO STOXX. It trades about 0.04 of its potential returns per unit of risk. Invesco EURO STOXX is currently generating about 0.05 per unit of risk. If you would invest 3,021 in iShares Core MSCI on August 31, 2024 and sell it today you would earn a total of 439.00 from holding iShares Core MSCI or generate 14.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
iShares Core MSCI vs. Invesco EURO STOXX
Performance |
| Timeline |
| iShares Core MSCI |
| Invesco EURO STOXX |
IShares Core and Invesco EURO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Invesco EURO
The main advantage of trading using opposite IShares Core and Invesco EURO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Invesco EURO 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 Invesco EURO will offset losses from the drop in Invesco EURO's long position.| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
| Invesco EURO vs. iShares Core SP | Invesco EURO vs. iShares Core MSCI | Invesco EURO vs. Lyxor UCITS Stoxx |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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