Correlation Between IShares Emerging and Xtrackers Emerging
Can any of the company-specific risk be diversified away by investing in both IShares Emerging and Xtrackers Emerging 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 IShares Emerging and Xtrackers Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Emerging Markets and Xtrackers Emerging Markets, you can compare the effects of market volatilities on IShares Emerging and Xtrackers Emerging 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 IShares Emerging with a short position of Xtrackers Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Emerging and Xtrackers Emerging.
Diversification Opportunities for IShares Emerging and Xtrackers Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Xtrackers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Emerging Markets and Xtrackers Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Emerging and IShares Emerging 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 iShares Emerging Markets are associated (or correlated) with Xtrackers Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Emerging has no effect on the direction of IShares Emerging i.e., IShares Emerging and Xtrackers Emerging go up and down completely randomly.
Pair Corralation between IShares Emerging and Xtrackers Emerging
Given the investment horizon of 90 days iShares Emerging Markets is expected to generate 1.0 times more return on investment than Xtrackers Emerging. However, IShares Emerging is 1.0 times more volatile than Xtrackers Emerging Markets. It trades about -0.02 of its potential returns per unit of risk. Xtrackers Emerging Markets is currently generating about -0.1 per unit of risk. If you would invest 2,869 in iShares Emerging Markets on September 13, 2024 and sell it today you would lose (38.00) from holding iShares Emerging Markets or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Emerging Markets vs. Xtrackers Emerging Markets
Performance |
| Timeline |
| iShares Emerging Markets |
| Xtrackers Emerging |
IShares Emerging and Xtrackers Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Emerging and Xtrackers Emerging
The main advantage of trading using opposite IShares Emerging and Xtrackers Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Emerging position performs unexpectedly, Xtrackers Emerging 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 Xtrackers Emerging will offset losses from the drop in Xtrackers Emerging's long position.| IShares Emerging vs. Freedom Day Dividend | IShares Emerging vs. Franklin Templeton ETF | IShares Emerging vs. iShares MSCI China | IShares Emerging vs. Tidal Trust II |
| Xtrackers Emerging vs. Global X MSCI | Xtrackers Emerging vs. Global X Alternative | Xtrackers Emerging vs. iShares Emerging Markets | Xtrackers Emerging vs. Global X SuperDividend |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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