Correlation Between IShares Europe and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares Europe 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 IShares Europe and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Europe ETF and iShares Global Comm, you can compare the effects of market volatilities on IShares Europe 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 IShares Europe with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Europe and IShares Global.
Diversification Opportunities for IShares Europe and IShares Global
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Europe ETF and iShares Global Comm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Comm and IShares Europe 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 Europe ETF 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 Comm has no effect on the direction of IShares Europe i.e., IShares Europe and IShares Global go up and down completely randomly.
Pair Corralation between IShares Europe and IShares Global
Considering the 90-day investment horizon IShares Europe is expected to generate 3.06 times less return on investment than IShares Global. But when comparing it to its historical volatility, iShares Europe ETF is 1.15 times less risky than IShares Global. It trades about 0.04 of its potential returns per unit of risk. iShares Global Comm is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,711 in iShares Global Comm on September 2, 2024 and sell it today you would earn a total of 3,007 from holding iShares Global Comm or generate 44.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Europe ETF vs. iShares Global Comm
Performance |
| Timeline |
| iShares Europe ETF |
| iShares Global Comm |
IShares Europe and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Europe and IShares Global
The main advantage of trading using opposite IShares Europe and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Europe 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.| IShares Europe vs. iShares MSCI Eurozone | IShares Europe vs. iShares MSCI Pacific | IShares Europe vs. iShares Latin America | IShares Europe vs. iShares MSCI France |
| IShares Global vs. iShares Global Financials | IShares Global vs. iShares Global Tech | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Telecommunications ETF |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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