Correlation Between Xtrackers California and IShares Short
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and IShares Short 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 Short 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 Short Maturity, you can compare the effects of market volatilities on Xtrackers California and IShares Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and IShares Short.
Diversification Opportunities for Xtrackers California and IShares Short
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xtrackers and IShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and iShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Maturity 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Maturity has no effect on the direction of Xtrackers California i.e., Xtrackers California and IShares Short go up and down completely randomly.
Pair Corralation between Xtrackers California and IShares Short
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 3.12 times more return on investment than IShares Short. However, Xtrackers California is 3.12 times more volatile than iShares Short Maturity. It trades about 0.17 of its potential returns per unit of risk. iShares Short Maturity is currently generating about 0.18 per unit of risk. If you would invest 2,497 in Xtrackers California Municipal on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Xtrackers California Municipal or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. iShares Short Maturity
Performance |
| Timeline |
| Xtrackers California |
| iShares Short Maturity |
Xtrackers California and IShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and IShares Short
The main advantage of trading using opposite Xtrackers California and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, IShares Short 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 Short will offset losses from the drop in IShares Short's long position.| Xtrackers California vs. SSGA Active Trust | Xtrackers California vs. SPDR Nuveen Municipal | Xtrackers California vs. iShares Short Maturity | Xtrackers California vs. First Trust Flexible |
| IShares Short vs. iShares Treasury Floating | IShares Short vs. iShares Short Term National | IShares Short vs. iShares Short Maturity | IShares Short vs. iShares Interest Rate |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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