Correlation Between IShares France and IShares SP
Can any of the company-specific risk be diversified away by investing in both IShares France and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on IShares France and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares France and IShares SP.
Diversification Opportunities for IShares France and IShares SP
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares France Govt and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of IShares France i.e., IShares France and IShares SP go up and down completely randomly.
Pair Corralation between IShares France and IShares SP
Assuming the 90 days trading horizon IShares France is expected to generate 65.42 times less return on investment than IShares SP. But when comparing it to its historical volatility, iShares France Govt is 2.61 times less risky than IShares SP. It trades about 0.01 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,426 in iShares SP 500 on August 29, 2024 and sell it today you would earn a total of 1,294 from holding iShares SP 500 or generate 29.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares France Govt vs. iShares SP 500
Performance |
| Timeline |
| iShares France Govt |
| iShares SP 500 |
IShares France and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares France and IShares SP
The main advantage of trading using opposite IShares France and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares France position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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