Correlation Between IShares SP and IShares European
Can any of the company-specific risk be diversified away by investing in both IShares SP and IShares European 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 SP and IShares European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and iShares European Property, you can compare the effects of market volatilities on IShares SP and IShares European 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 SP with a short position of IShares European. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and IShares European.
Diversification Opportunities for IShares SP and IShares European
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and IShares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and iShares European Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares European Property and IShares SP 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 SP 500 are associated (or correlated) with IShares European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares European Property has no effect on the direction of IShares SP i.e., IShares SP and IShares European go up and down completely randomly.
Pair Corralation between IShares SP and IShares European
Assuming the 90 days trading horizon iShares SP 500 is expected to generate 0.68 times more return on investment than IShares European. However, iShares SP 500 is 1.47 times less risky than IShares European. It trades about 0.16 of its potential returns per unit of risk. iShares European Property is currently generating about 0.04 per unit of risk. If you would invest 4,206 in iShares SP 500 on September 3, 2024 and sell it today you would earn a total of 1,543 from holding iShares SP 500 or generate 36.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. iShares European Property
Performance |
| Timeline |
| iShares SP 500 |
| iShares European Property |
IShares SP and IShares European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and IShares European
The main advantage of trading using opposite IShares SP and IShares European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, IShares European 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 European will offset losses from the drop in IShares European's long position.| IShares SP vs. iShares III Public | IShares SP vs. iShares Core MSCI | IShares SP vs. iShares France Govt | IShares SP vs. iShares Edge MSCI |
| IShares European vs. iShares III Public | IShares European vs. iShares Core MSCI | IShares European vs. iShares France Govt | IShares European 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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