Correlation Between Amundi EUR and IShares SP

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

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

Diversification Opportunities for Amundi EUR and IShares SP

0.32

Correlation Coefficient

Amundi EUR  IShares SP

Weak diversification

The 3 months correlation between Amundi and IShares is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Amundi EUR High and iShares SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP SmallCap and Amundi EUR 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 Amundi EUR High are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP SmallCap has no effect on the direction of Amundi EUR i.e., Amundi EUR and IShares SP go up and down completely randomly.

Pair Corralation between Amundi EUR and IShares SP

Assuming the 90 days trading horizon Amundi EUR High is expected to generate 0.15 times more return on investment than IShares SP. However, Amundi EUR High is 6.68 times less risky than IShares SP. It trades about 0.09 of its potential returns per unit of risk. iShares SP SmallCap is currently generating about -0.01 per unit of risk. If you would invest  10,429  in Amundi EUR High on October 21, 2024 and sell it today you would earn a total of  71.00  from holding Amundi EUR High or generate 0.68% return on investment over 90 days.

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

Amundi EUR High  vs.  iShares SP SmallCap

Amundi EUR High

Risk-Adjusted Performance

7 of 100

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. 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.

iShares SP SmallCap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP SmallCap are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares SP 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 Amundi EUR and IShares SP

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

The idea behind Amundi EUR High and iShares SP SmallCap 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.