Correlation Between Xtrackers MSCI and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI 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 Xtrackers MSCI and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI Emerging and iShares MSCI Emerging, you can compare the effects of market volatilities on Xtrackers MSCI 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 Xtrackers MSCI with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and IShares MSCI.
Diversification Opportunities for Xtrackers MSCI and IShares MSCI
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging and iShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Emerging and Xtrackers MSCI 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 MSCI Emerging 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 Emerging has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and IShares MSCI go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and IShares MSCI
Given the investment horizon of 90 days Xtrackers MSCI Emerging is expected to generate 1.09 times more return on investment than IShares MSCI. However, Xtrackers MSCI is 1.09 times more volatile than iShares MSCI Emerging. It trades about -0.11 of its potential returns per unit of risk. iShares MSCI Emerging is currently generating about -0.13 per unit of risk. If you would invest 2,588 in Xtrackers MSCI Emerging on September 1, 2024 and sell it today you would lose (50.00) from holding Xtrackers MSCI Emerging or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI Emerging vs. iShares MSCI Emerging
Performance |
| Timeline |
| Xtrackers MSCI Emerging |
| iShares MSCI Emerging |
Xtrackers MSCI and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and IShares MSCI
The main advantage of trading using opposite Xtrackers MSCI and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI 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.| Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency Hedged |
| IShares MSCI vs. Xtrackers MSCI Emerging | IShares MSCI vs. FlexShares Morningstar Emerging | IShares MSCI vs. First Trust Emerging |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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