Correlation Between IShareso Government and IShares Euro
Can any of the company-specific risk be diversified away by investing in both IShareso Government and IShares 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 IShareso Government and IShares Euro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShareso Government Bond and iShares Euro Dividend, you can compare the effects of market volatilities on IShareso Government and IShares 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 IShareso Government with a short position of IShares Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShareso Government and IShares Euro.
Diversification Opportunities for IShareso Government and IShares Euro
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShareso and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShareso Government Bond and iShares Euro Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Euro Dividend and IShareso Government 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 iShareso Government Bond are associated (or correlated) with IShares Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Euro Dividend has no effect on the direction of IShareso Government i.e., IShareso Government and IShares Euro go up and down completely randomly.
Pair Corralation between IShareso Government and IShares Euro
Assuming the 90 days trading horizon IShareso Government is expected to generate 1.91 times less return on investment than IShares Euro. But when comparing it to its historical volatility, iShareso Government Bond is 9.43 times less risky than IShares Euro. It trades about 0.39 of its potential returns per unit of risk. iShares Euro Dividend is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,761 in iShares Euro Dividend on September 12, 2024 and sell it today you would earn a total of 21.00 from holding iShares Euro Dividend or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShareso Government Bond vs. iShares Euro Dividend
Performance |
| Timeline |
| iShareso Government Bond |
| iShares Euro Dividend |
IShareso Government and IShares Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShareso Government and IShares Euro
The main advantage of trading using opposite IShareso Government and IShares Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShareso Government position performs unexpectedly, IShares 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 IShares Euro will offset losses from the drop in IShares Euro's long position.| IShareso Government vs. SPDR Dow Jones | IShareso Government vs. iShares Core MSCI | IShareso Government vs. iShares SP 500 | IShareso Government vs. Vanguard FTSE All World |
| IShares Euro vs. SPDR Dow Jones | IShares Euro vs. iShares Core MSCI | IShares Euro vs. iShares SP 500 | IShares Euro vs. Vanguard FTSE All World |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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