Correlation Between IShares MSCI and OShares Europe
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and OShares 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 OShares 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 OShares Europe Quality, you can compare the effects of market volatilities on IShares MSCI and OShares 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 OShares Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and OShares Europe.
Diversification Opportunities for IShares MSCI and OShares Europe
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and OShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Eurozone and OShares Europe Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Europe Quality 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 OShares Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Europe Quality has no effect on the direction of IShares MSCI i.e., IShares MSCI and OShares Europe go up and down completely randomly.
Pair Corralation between IShares MSCI and OShares Europe
Considering the 90-day investment horizon IShares MSCI is expected to generate 1.01 times less return on investment than OShares Europe. In addition to that, IShares MSCI is 1.16 times more volatile than OShares Europe Quality. It trades about 0.06 of its total potential returns per unit of risk. OShares Europe Quality is currently generating about 0.07 per unit of volatility. If you would invest 2,327 in OShares Europe Quality on November 19, 2024 and sell it today you would earn a total of 693.00 from holding OShares Europe Quality or generate 29.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Eurozone vs. OShares Europe Quality
Performance |
| Timeline |
| iShares MSCI Eurozone |
| OShares Europe Quality |
IShares MSCI and OShares Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and OShares Europe
The main advantage of trading using opposite IShares MSCI and OShares Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, OShares 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 OShares Europe will offset losses from the drop in OShares Europe's long position.| IShares MSCI vs. iShares MSCI France | IShares MSCI vs. iShares Europe ETF | IShares MSCI vs. iShares MSCI United | IShares MSCI vs. iShares MSCI Spain |
| OShares Europe vs. OShares Small Cap Quality | OShares Europe vs. OShares Quality Dividend | OShares Europe vs. OShares Global Internet | OShares Europe vs. WisdomTree Europe Quality |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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