Correlation Between IShares Core and Amundi EUR

Can any of the company-specific risk be diversified away by investing in both IShares Core and Amundi EUR 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 Core and Amundi EUR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core SP and Amundi EUR High, you can compare the effects of market volatilities on IShares Core and Amundi EUR 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 Core with a short position of Amundi EUR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Amundi EUR.

Diversification Opportunities for IShares Core and Amundi EUR

0.09

Correlation Coefficient

IShares Core  Amundi EUR

Significant diversification

The 3 months correlation between IShares and Amundi is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Amundi EUR High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi EUR High and IShares Core 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 Core SP are associated (or correlated) with Amundi EUR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi EUR High has no effect on the direction of IShares Core i.e., IShares Core and Amundi EUR go up and down completely randomly.

Pair Corralation between IShares Core and Amundi EUR

Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the Amundi EUR. In addition to that, IShares Core is 6.16 times more volatile than Amundi EUR High. It trades about -0.07 of its total potential returns per unit of risk. Amundi EUR High is currently generating about 0.1 per unit of volatility. If you would invest  10,520  in Amundi EUR High on December 23, 2024 and sell it today you would earn a total of  89.00  from holding Amundi EUR High or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

iShares Core SP  vs.  Amundi EUR High

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Amundi EUR High

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi EUR High are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Amundi EUR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Amundi EUR

The main advantage of trading using opposite IShares Core and Amundi EUR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Amundi EUR 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 Amundi EUR will offset losses from the drop in Amundi EUR's long position.

The idea behind iShares Core SP and Amundi EUR High 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.