Correlation Between IShares Core and IShares Euro
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and IShares Euro 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 iShares Euro Corporate, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of IShares Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares Euro.
Diversification Opportunities for IShares Core and IShares Euro
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares Euro Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Euro Corporate 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 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 Corporate has no effect on the direction of IShares Core i.e., IShares Core and IShares Euro go up and down completely randomly.
Pair Corralation between IShares Core and IShares Euro
Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 0.92 times more return on investment than IShares Euro. However, iShares Core MSCI is 1.09 times less risky than IShares Euro. It trades about 0.06 of its potential returns per unit of risk. iShares Euro Corporate is currently generating about 0.03 per unit of risk. If you would invest 2,558 in iShares Core MSCI on August 29, 2024 and sell it today you would earn a total of 579.00 from holding iShares Core MSCI or generate 22.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares Euro Corporate
Performance |
| Timeline |
| iShares Core MSCI |
| iShares Euro Corporate |
IShares Core and IShares Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares Euro
The main advantage of trading using opposite IShares Core and IShares Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.The idea behind iShares Core MSCI and iShares Euro Corporate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Euro vs. iShares III Public | IShares Euro vs. iShares Core MSCI | IShares Euro vs. iShares France Govt | IShares Euro vs. iShares Edge MSCI |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |