Correlation Between IShares Edge and IShares Euro
Can any of the company-specific risk be diversified away by investing in both IShares Edge 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 Edge 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 Edge MSCI and iShares Euro Dividend, you can compare the effects of market volatilities on IShares Edge 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 Edge with a short position of IShares Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares Euro.
Diversification Opportunities for IShares Edge and IShares Euro
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge MSCI and iShares Euro Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Euro Dividend and IShares Edge 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 Edge 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 Dividend has no effect on the direction of IShares Edge i.e., IShares Edge and IShares Euro go up and down completely randomly.
Pair Corralation between IShares Edge and IShares Euro
Assuming the 90 days trading horizon iShares Edge MSCI is expected to under-perform the IShares Euro. In addition to that, IShares Edge is 1.34 times more volatile than iShares Euro Dividend. It trades about -0.05 of its total potential returns per unit of risk. iShares Euro Dividend is currently generating about 0.23 per unit of volatility. If you would invest 1,731 in iShares Euro Dividend on September 13, 2024 and sell it today you would earn a total of 51.00 from holding iShares Euro Dividend or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares Euro Dividend
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares Euro Dividend |
IShares Edge and IShares Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares Euro
The main advantage of trading using opposite IShares Edge and IShares Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge 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.| IShares Edge vs. SPDR Dow Jones | IShares Edge vs. iShares Core MSCI | IShares Edge vs. iShares SP 500 | IShares Edge vs. iShares Core MSCI |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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