Correlation Between IShares Core and IShares STOXX
Can any of the company-specific risk be diversified away by investing in both IShares Core and IShares STOXX 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 STOXX 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 STOXX Europe, you can compare the effects of market volatilities on IShares Core and IShares STOXX 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 STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares STOXX.
Diversification Opportunities for IShares Core and IShares STOXX
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and iShares STOXX Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares STOXX Europe 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 STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares STOXX Europe has no effect on the direction of IShares Core i.e., IShares Core and IShares STOXX go up and down completely randomly.
Pair Corralation between IShares Core and IShares STOXX
Assuming the 90 days trading horizon IShares Core is expected to generate 2.91 times less return on investment than IShares STOXX. But when comparing it to its historical volatility, iShares Core MSCI is 1.79 times less risky than IShares STOXX. It trades about 0.07 of its potential returns per unit of risk. iShares STOXX Europe is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 577.00 in iShares STOXX Europe on September 1, 2024 and sell it today you would earn a total of 18.00 from holding iShares STOXX Europe or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares STOXX Europe
Performance |
| Timeline |
| iShares Core MSCI |
| iShares STOXX Europe |
IShares Core and IShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares STOXX
The main advantage of trading using opposite IShares Core and IShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, IShares STOXX 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 STOXX will offset losses from the drop in IShares STOXX's long position.| IShares Core vs. iShares Core MSCI | IShares Core vs. BlackRock ESG Multi Asset | IShares Core vs. Pershing Square Holdings | IShares Core vs. ASML Holding NV |
| IShares STOXX vs. Vanguard SP 500 | IShares STOXX vs. SPDR Dow Jones | IShares STOXX vs. iShares Core MSCI | IShares STOXX 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |