Correlation Between Eurocastle Investment and IShares MSCI

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

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

Diversification Opportunities for Eurocastle Investment and IShares MSCI

-0.4

Correlation Coefficient

Eurocastle Investment  IShares MSCI

Very good diversification

The 3 months correlation between Eurocastle and IShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eurocastle Investment and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and Eurocastle Investment 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 Eurocastle Investment are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Eurocastle Investment i.e., Eurocastle Investment and IShares MSCI go up and down completely randomly.

Pair Corralation between Eurocastle Investment and IShares MSCI

Assuming the 90 days trading horizon Eurocastle Investment is expected to generate 15.18 times more return on investment than IShares MSCI. However, Eurocastle Investment is 15.18 times more volatile than iShares MSCI USA. It trades about 0.15 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.14 per unit of risk. If you would invest  710.00  in Eurocastle Investment on September 20, 2024 and sell it today you would earn a total of  235.00  from holding Eurocastle Investment or generate 33.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.19%
Values	Daily Returns

Eurocastle Investment  vs.  iShares MSCI USA

Eurocastle Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurocastle Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eurocastle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI USA

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares MSCI 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 Eurocastle Investment and IShares MSCI

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

The idea behind Eurocastle Investment and iShares MSCI USA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.