Correlation Between IShares Treasury and Amundi EUR

Can any of the company-specific risk be diversified away by investing in both IShares Treasury 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 Treasury 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 Treasury Bond and Amundi EUR High, you can compare the effects of market volatilities on IShares Treasury 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 Treasury with a short position of Amundi EUR. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and Amundi EUR.

Diversification Opportunities for IShares Treasury and Amundi EUR

-0.8

Correlation Coefficient

IShares Treasury  Amundi EUR

Pay attention - limited upside

The 3 months correlation between IShares and Amundi is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond 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 Treasury 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 Treasury Bond 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 Treasury i.e., IShares Treasury and Amundi EUR go up and down completely randomly.

Pair Corralation between IShares Treasury and Amundi EUR

Assuming the 90 days trading horizon iShares Treasury Bond is expected to generate 6.53 times more return on investment than Amundi EUR. However, IShares Treasury is 6.53 times more volatile than Amundi EUR High. It trades about 0.09 of its potential returns per unit of risk. Amundi EUR High is currently generating about 0.39 per unit of risk. If you would invest  344.00  in iShares Treasury Bond on September 5, 2024 and sell it today you would earn a total of  6.00  from holding iShares Treasury Bond or generate 1.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares Treasury Bond  vs.  Amundi EUR High

iShares Treasury Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amundi EUR High

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi EUR High are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi EUR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Treasury and Amundi EUR

The main advantage of trading using opposite IShares Treasury and Amundi EUR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury 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 Treasury Bond 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.