Correlation Between Xtrackers FTSE and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers FTSE 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 FTSE 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 FTSE Developed and iShares MSCI EAFE, you can compare the effects of market volatilities on Xtrackers FTSE 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 FTSE with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers FTSE and IShares MSCI.
Diversification Opportunities for Xtrackers FTSE and IShares MSCI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers FTSE Developed and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE and Xtrackers FTSE 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 FTSE Developed 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 EAFE has no effect on the direction of Xtrackers FTSE i.e., Xtrackers FTSE and IShares MSCI go up and down completely randomly.
Pair Corralation between Xtrackers FTSE and IShares MSCI
Given the investment horizon of 90 days Xtrackers FTSE Developed is expected to generate 1.05 times more return on investment than IShares MSCI. However, Xtrackers FTSE is 1.05 times more volatile than iShares MSCI EAFE. It trades about 0.19 of its potential returns per unit of risk. iShares MSCI EAFE is currently generating about 0.18 per unit of risk. If you would invest 2,891 in Xtrackers FTSE Developed on September 13, 2024 and sell it today you would earn a total of 64.00 from holding Xtrackers FTSE Developed or generate 2.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Xtrackers FTSE Developed vs. iShares MSCI EAFE
Performance |
Timeline |
Xtrackers FTSE Developed |
iShares MSCI EAFE |
Xtrackers FTSE and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers FTSE and IShares MSCI
The main advantage of trading using opposite Xtrackers FTSE and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers FTSE 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 FTSE vs. Global X MSCI | Xtrackers FTSE vs. Global X Alternative | Xtrackers FTSE vs. First Trust Intl | Xtrackers FTSE vs. iShares AsiaPacific Dividend |
IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. WisdomTree International SmallCap | IShares MSCI vs. iShares Russell Mid Cap |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
CEOs Directory Screen CEOs from public companies around the world | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |