Correlation Between Xtrackers MSCI and IShares Core
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and IShares Core 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 Core 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 Core MSCI, you can compare the effects of market volatilities on Xtrackers MSCI and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and IShares Core.
Diversification Opportunities for Xtrackers MSCI and IShares Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and IShares Core go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and IShares Core
Given the investment horizon of 90 days Xtrackers MSCI Emerging is expected to generate 0.83 times more return on investment than IShares Core. However, Xtrackers MSCI Emerging is 1.2 times less risky than IShares Core. It trades about -0.11 of its potential returns per unit of risk. iShares Core MSCI is currently generating about -0.11 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI Emerging vs. iShares Core MSCI
Performance |
| Timeline |
| Xtrackers MSCI Emerging |
| iShares Core MSCI |
Xtrackers MSCI and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and IShares Core
The main advantage of trading using opposite Xtrackers MSCI and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core'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 Core vs. Xtrackers MSCI Emerging | IShares Core vs. FlexShares Morningstar Emerging | IShares Core 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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