Correlation Between Xtrackers California and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and IShares ESG 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 Xtrackers California and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and iShares ESG Advanced, you can compare the effects of market volatilities on Xtrackers California and IShares ESG 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 Xtrackers California with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and IShares ESG.
Diversification Opportunities for Xtrackers California and IShares ESG
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced and Xtrackers California 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 Xtrackers California Municipal are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Advanced has no effect on the direction of Xtrackers California i.e., Xtrackers California and IShares ESG go up and down completely randomly.
Pair Corralation between Xtrackers California and IShares ESG
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 0.49 times more return on investment than IShares ESG. However, Xtrackers California Municipal is 2.06 times less risky than IShares ESG. It trades about 0.4 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.07 per unit of risk. If you would invest 2,503 in Xtrackers California Municipal on September 12, 2024 and sell it today you would earn a total of 44.85 from holding Xtrackers California Municipal or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. iShares ESG Advanced
Performance |
| Timeline |
| Xtrackers California |
| iShares ESG Advanced |
Xtrackers California and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and IShares ESG
The main advantage of trading using opposite Xtrackers California and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| Xtrackers California vs. VCRM | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. ALPS Intermediate Municipal |
| IShares ESG vs. American Century STOXX | IShares ESG vs. Franklin Liberty Investment | IShares ESG vs. Aquagold International | IShares ESG vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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