Correlation Between IShares EURO and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares EURO and IShares Core 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 EURO and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares EURO STOXX and iShares Core DAX, you can compare the effects of market volatilities on IShares EURO and IShares Core 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 EURO with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares EURO and IShares Core.
Diversification Opportunities for IShares EURO and IShares Core
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 EURO STOXX and iShares Core DAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core DAX and IShares EURO 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 EURO STOXX are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core DAX has no effect on the direction of IShares EURO i.e., IShares EURO and IShares Core go up and down completely randomly.
Pair Corralation between IShares EURO and IShares Core
Assuming the 90 days trading horizon IShares EURO is expected to generate 1.31 times less return on investment than IShares Core. In addition to that, IShares EURO is 1.02 times more volatile than iShares Core DAX. It trades about 0.05 of its total potential returns per unit of risk. iShares Core DAX is currently generating about 0.07 per unit of volatility. If you would invest 12,172 in iShares Core DAX on August 27, 2024 and sell it today you would earn a total of 3,904 from holding iShares Core DAX or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.21% |
| Values | Daily Returns |
iShares EURO STOXX vs. iShares Core DAX
Performance |
| Timeline |
| iShares EURO STOXX |
| iShares Core DAX |
IShares EURO and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares EURO and IShares Core
The main advantage of trading using opposite IShares EURO and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares EURO position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares EURO vs. iShares Core DAX | IShares EURO vs. iShares ATX UCITS | IShares EURO vs. RATH Aktiengesellschaft | IShares EURO vs. AT S Austria |
| IShares Core vs. iShares ATX UCITS | IShares Core vs. RATH Aktiengesellschaft | IShares Core vs. AT S Austria | IShares Core vs. BAWAG Group AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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