Correlation Between IShares France and IShares III
Can any of the company-specific risk be diversified away by investing in both IShares France and IShares III 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 France and IShares III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares France Govt and iShares III Public, you can compare the effects of market volatilities on IShares France and IShares III 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 France with a short position of IShares III. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares France and IShares III.
Diversification Opportunities for IShares France and IShares III
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares France Govt and iShares III Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares III Public and IShares France 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 France Govt are associated (or correlated) with IShares III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares III Public has no effect on the direction of IShares France i.e., IShares France and IShares III go up and down completely randomly.
Pair Corralation between IShares France and IShares III
Assuming the 90 days trading horizon iShares France Govt is expected to under-perform the IShares III. But the etf apears to be less risky and, when comparing its historical volatility, iShares France Govt is 1.43 times less risky than IShares III. The etf trades about -0.01 of its potential returns per unit of risk. The iShares III Public is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14,749 in iShares III Public on August 26, 2024 and sell it today you would earn a total of 673.00 from holding iShares III Public or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares France Govt vs. iShares III Public
Performance |
| Timeline |
| iShares France Govt |
| iShares III Public |
IShares France and IShares III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares France and IShares III
The main advantage of trading using opposite IShares France and IShares III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares France position performs unexpectedly, IShares III 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 III will offset losses from the drop in IShares III's long position.| IShares France vs. iShares III Public | IShares France vs. iShares Core MSCI | IShares France vs. iShares Edge MSCI | IShares France vs. iShares Core FTSE |
| IShares III vs. Vanguard SP 500 | IShares III vs. SPDR Dow Jones | IShares III vs. iShares Core MSCI | IShares III vs. iShares SP 500 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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