Correlation Between IShares VII and Amundi Euro

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

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

Diversification Opportunities for IShares VII and Amundi Euro

-0.6

Correlation Coefficient

IShares VII  Amundi Euro

Excellent diversification

The 3 months correlation between IShares and Amundi is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and Amundi Euro Stoxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Euro Stoxx and IShares VII 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 VII PLC are associated (or correlated) with Amundi Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Euro Stoxx has no effect on the direction of IShares VII i.e., IShares VII and Amundi Euro go up and down completely randomly.

Pair Corralation between IShares VII and Amundi Euro

Assuming the 90 days trading horizon iShares VII PLC is expected to under-perform the Amundi Euro. In addition to that, IShares VII is 1.11 times more volatile than Amundi Euro Stoxx. It trades about -0.08 of its total potential returns per unit of risk. Amundi Euro Stoxx is currently generating about 0.37 per unit of volatility. If you would invest  3,281  in Amundi Euro Stoxx on December 24, 2024 and sell it today you would earn a total of  629.00  from holding Amundi Euro Stoxx or generate 19.17% return on investment over 90 days.

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

iShares VII PLC  vs.  Amundi Euro Stoxx

iShares VII PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares VII PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares VII is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amundi Euro Stoxx

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Euro Stoxx are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Amundi Euro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares VII and Amundi Euro

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

The idea behind iShares VII PLC and Amundi Euro Stoxx 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.