Correlation Between IShares Edge and IShares France
Can any of the company-specific risk be diversified away by investing in both IShares Edge and IShares France 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 France 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 France Govt, you can compare the effects of market volatilities on IShares Edge and IShares France 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 France. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and IShares France.
Diversification Opportunities for IShares Edge and IShares France
0.3 | Correlation Coefficient |
Weak 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 Edge MSCI and iShares France Govt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares France Govt 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 France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares France Govt has no effect on the direction of IShares Edge i.e., IShares Edge and IShares France go up and down completely randomly.
Pair Corralation between IShares Edge and IShares France
Assuming the 90 days trading horizon iShares Edge MSCI is expected to under-perform the IShares France. In addition to that, IShares Edge is 3.11 times more volatile than iShares France Govt. It trades about -0.12 of its total potential returns per unit of risk. iShares France Govt is currently generating about 0.06 per unit of volatility. If you would invest 13,018 in iShares France Govt on August 29, 2024 and sell it today you would earn a total of 44.00 from holding iShares France Govt or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge MSCI vs. iShares France Govt
Performance |
| Timeline |
| iShares Edge MSCI |
| iShares France Govt |
IShares Edge and IShares France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and IShares France
The main advantage of trading using opposite IShares Edge and IShares France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, IShares France 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 France will offset losses from the drop in IShares France's long position.The idea behind iShares Edge MSCI and iShares France Govt 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 France vs. iShares III Public | IShares France vs. iShares Core MSCI | IShares France vs. iShares Edge MSCI | IShares France vs. iShares Core FTSE |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |