Correlation Between IShares Global and IShares Europe
Can any of the company-specific risk be diversified away by investing in both IShares Global and IShares Europe 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 Global and IShares Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global 100 and iShares Europe ETF, you can compare the effects of market volatilities on IShares Global and IShares Europe 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 Global with a short position of IShares Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and IShares Europe.
Diversification Opportunities for IShares Global and IShares Europe
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global 100 and iShares Europe ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Europe ETF and IShares Global 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 Global 100 are associated (or correlated) with IShares Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Europe ETF has no effect on the direction of IShares Global i.e., IShares Global and IShares Europe go up and down completely randomly.
Pair Corralation between IShares Global and IShares Europe
Considering the 90-day investment horizon iShares Global 100 is expected to generate 0.98 times more return on investment than IShares Europe. However, iShares Global 100 is 1.02 times less risky than IShares Europe. It trades about 0.11 of its potential returns per unit of risk. iShares Europe ETF is currently generating about 0.05 per unit of risk. If you would invest 6,390 in iShares Global 100 on August 30, 2024 and sell it today you would earn a total of 3,573 from holding iShares Global 100 or generate 55.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global 100 vs. iShares Europe ETF
Performance |
| Timeline |
| iShares Global 100 |
| iShares Europe ETF |
IShares Global and IShares Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and IShares Europe
The main advantage of trading using opposite IShares Global and IShares Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, IShares Europe 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 Europe will offset losses from the drop in IShares Europe's long position.| IShares Global vs. iShares Europe ETF | IShares Global vs. iShares Global Financials | IShares Global vs. iShares Global Healthcare | IShares Global vs. iShares Global Comm |
| IShares Europe vs. iShares MSCI France | IShares Europe vs. iShares MSCI United | IShares Europe vs. iShares MSCI Spain | IShares Europe vs. iShares MSCI Netherlands |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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