Correlation Between OShares Small and OShares Europe
Can any of the company-specific risk be diversified away by investing in both OShares Small and OShares 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 OShares Small and OShares Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OShares Small Cap Quality and OShares Europe Quality, you can compare the effects of market volatilities on OShares Small and OShares 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 OShares Small with a short position of OShares Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of OShares Small and OShares Europe.
Diversification Opportunities for OShares Small and OShares Europe
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OShares and OShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding OShares Small Cap Quality and OShares Europe Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Europe Quality and OShares Small 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 OShares Small Cap Quality are associated (or correlated) with OShares Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Europe Quality has no effect on the direction of OShares Small i.e., OShares Small and OShares Europe go up and down completely randomly.
Pair Corralation between OShares Small and OShares Europe
Given the investment horizon of 90 days OShares Small Cap Quality is expected to generate 1.31 times more return on investment than OShares Europe. However, OShares Small is 1.31 times more volatile than OShares Europe Quality. It trades about 0.2 of its potential returns per unit of risk. OShares Europe Quality is currently generating about -0.33 per unit of risk. If you would invest 4,473 in OShares Small Cap Quality on August 29, 2024 and sell it today you would earn a total of 227.00 from holding OShares Small Cap Quality or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OShares Small Cap Quality vs. OShares Europe Quality
Performance |
| Timeline |
| OShares Small Cap |
| OShares Europe Quality |
OShares Small and OShares Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OShares Small and OShares Europe
The main advantage of trading using opposite OShares Small and OShares Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OShares Small position performs unexpectedly, OShares 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 OShares Europe will offset losses from the drop in OShares Europe's long position.| OShares Small vs. OShares Quality Dividend | OShares Small vs. OShares Europe Quality | OShares Small vs. OShares Global Internet | OShares Small vs. ProShares SP MidCap |
| OShares Europe vs. WisdomTree International Hedged | OShares Europe vs. WisdomTree Emerging Markets | OShares Europe vs. WisdomTree Dynamic Currency |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |