Correlation Between European Residential and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both European Residential and IShares SPTSX 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 Residential and IShares SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Residential Real and iShares SPTSX Capped, you can compare the effects of market volatilities on European Residential and IShares SPTSX 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 Residential with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and IShares SPTSX.
Diversification Opportunities for European Residential and IShares SPTSX
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between European and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped and European Residential 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 Residential Real are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of European Residential i.e., European Residential and IShares SPTSX go up and down completely randomly.
Pair Corralation between European Residential and IShares SPTSX
Assuming the 90 days trading horizon European Residential Real is expected to generate 2.06 times more return on investment than IShares SPTSX. However, European Residential is 2.06 times more volatile than iShares SPTSX Capped. It trades about 0.27 of its potential returns per unit of risk. iShares SPTSX Capped is currently generating about 0.49 per unit of risk. If you would invest 312.00 in European Residential Real on September 3, 2024 and sell it today you would earn a total of 68.00 from holding European Residential Real or generate 21.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. iShares SPTSX Capped
Performance |
| Timeline |
| European Residential Real |
| iShares SPTSX Capped |
European Residential and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and IShares SPTSX
The main advantage of trading using opposite European Residential and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, IShares SPTSX 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 IShares SPTSX will offset losses from the drop in IShares SPTSX's long position.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
| IShares SPTSX vs. International Zeolite Corp | IShares SPTSX vs. European Residential Real | IShares SPTSX vs. Financial 15 Split | IShares SPTSX vs. Rubicon Organics |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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