Correlation Between IShares STOXX and Multi Units

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

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

Diversification Opportunities for IShares STOXX and Multi Units

0.94

Correlation Coefficient

IShares STOXX  Multi Units

Almost no diversification

The 3 months correlation between IShares and Multi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares STOXX Europe and Multi Units France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units France and IShares STOXX 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 STOXX Europe are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units France has no effect on the direction of IShares STOXX i.e., IShares STOXX and Multi Units go up and down completely randomly.

Pair Corralation between IShares STOXX and Multi Units

Assuming the 90 days trading horizon iShares STOXX Europe is expected to generate 1.38 times more return on investment than Multi Units. However, IShares STOXX is 1.38 times more volatile than Multi Units France. It trades about 0.18 of its potential returns per unit of risk. Multi Units France is currently generating about 0.11 per unit of risk. If you would invest  2,424  in iShares STOXX Europe on April 24, 2025 and sell it today you would earn a total of  326.00  from holding iShares STOXX Europe or generate 13.45% return on investment over 90 days.

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

iShares STOXX Europe  vs.  Multi Units France

iShares STOXX Europe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares STOXX Europe are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IShares STOXX reported solid returns over the last few months and may actually be approaching a breakup point.

Multi Units France

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Units France are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Multi Units is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares STOXX and Multi Units

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

The idea behind iShares STOXX Europe and Multi Units France 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.