Correlation Between IShares Core and OShares Europe
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core MSCI and OShares Europe Quality, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of OShares Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and OShares Europe.
Diversification Opportunities for IShares Core and OShares Europe
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and OShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 Core 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 Core MSCI 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 Core i.e., IShares Core and OShares Europe go up and down completely randomly.
Pair Corralation between IShares Core and OShares Europe
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 1.01 times more return on investment than OShares Europe. However, IShares Core is 1.01 times more volatile than OShares Europe Quality. It trades about -0.15 of its potential returns per unit of risk. OShares Europe Quality is currently generating about -0.15 per unit of risk. If you would invest 6,036 in iShares Core MSCI on August 28, 2024 and sell it today you would lose (479.00) from holding iShares Core MSCI or give up 7.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. OShares Europe Quality
Performance |
| Timeline |
| iShares Core MSCI |
| OShares Europe Quality |
IShares Core and OShares Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and OShares Europe
The main advantage of trading using opposite IShares Core and OShares Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares MSCI Europe | IShares Core vs. iShares Currency Hedged |
| OShares Europe vs. WisdomTree International Hedged | OShares Europe vs. WisdomTree Emerging Markets | OShares 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |