Correlation Between Select STOXX and IShares Global
Can any of the company-specific risk be diversified away by investing in both Select STOXX and IShares Global 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 Select STOXX and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select STOXX Europe and iShares Global Industrials, you can compare the effects of market volatilities on Select STOXX and IShares Global 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 Select STOXX with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select STOXX and IShares Global.
Diversification Opportunities for Select STOXX and IShares Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Select STOXX Europe and iShares Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Indus and Select STOXX 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 Select STOXX Europe are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Indus has no effect on the direction of Select STOXX i.e., Select STOXX and IShares Global go up and down completely randomly.
Pair Corralation between Select STOXX and IShares Global
Given the investment horizon of 90 days Select STOXX Europe is expected to generate 1.06 times more return on investment than IShares Global. However, Select STOXX is 1.06 times more volatile than iShares Global Industrials. It trades about 0.44 of its potential returns per unit of risk. iShares Global Industrials is currently generating about 0.26 per unit of risk. If you would invest 2,440 in Select STOXX Europe on November 3, 2024 and sell it today you would earn a total of 220.00 from holding Select STOXX Europe or generate 9.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Select STOXX Europe vs. iShares Global Industrials
Performance |
Timeline |
Select STOXX Europe |
iShares Global Indus |
Select STOXX and IShares Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select STOXX and IShares Global
The main advantage of trading using opposite Select STOXX and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select STOXX position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.Select STOXX vs. Ultimus Managers Trust | Select STOXX vs. American Beacon Select | Select STOXX vs. First Trust Indxx | Select STOXX vs. Direxion Daily SP |
IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Utilities | IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Materials |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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