Correlation Between IShares MSCI and IShares Europe
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Europe 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 IShares Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Eurozone and iShares Europe ETF, you can compare the effects of market volatilities on IShares MSCI and IShares Europe 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 IShares Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Europe.
Diversification Opportunities for IShares MSCI and IShares Europe
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Eurozone and iShares Europe ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Europe ETF 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 Eurozone are associated (or correlated) with IShares Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Europe ETF has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Europe go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Europe
Considering the 90-day investment horizon iShares MSCI Eurozone is expected to under-perform the IShares Europe. In addition to that, IShares MSCI is 1.13 times more volatile than iShares Europe ETF. It trades about -0.27 of its total potential returns per unit of risk. iShares Europe ETF is currently generating about -0.29 per unit of volatility. If you would invest 5,640 in iShares Europe ETF on August 28, 2024 and sell it today you would lose (314.00) from holding iShares Europe ETF or give up 5.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Eurozone vs. iShares Europe ETF
Performance |
| Timeline |
| iShares MSCI Eurozone |
| iShares Europe ETF |
IShares MSCI and IShares Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Europe
The main advantage of trading using opposite IShares MSCI and IShares Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Europe 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 Europe will offset losses from the drop in IShares Europe's long position.| IShares MSCI vs. WisdomTree International Hedged | IShares MSCI vs. WisdomTree Emerging Markets | IShares MSCI vs. WisdomTree Dynamic Currency |
| IShares Europe vs. WisdomTree International Hedged | IShares Europe vs. WisdomTree Emerging Markets | IShares Europe vs. WisdomTree Dynamic Currency |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |