Correlation Between IShares MSCI and Xtrackers International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Xtrackers International 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 MSCI and Xtrackers International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Emerging and Xtrackers International Real, you can compare the effects of market volatilities on IShares MSCI and Xtrackers International 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 MSCI with a short position of Xtrackers International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Xtrackers International.
Diversification Opportunities for IShares MSCI and Xtrackers International
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 MSCI Emerging and Xtrackers International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers International and IShares 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 iShares MSCI Emerging are associated (or correlated) with Xtrackers International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers International has no effect on the direction of IShares MSCI i.e., IShares MSCI and Xtrackers International go up and down completely randomly.
Pair Corralation between IShares MSCI and Xtrackers International
Given the investment horizon of 90 days iShares MSCI Emerging is expected to generate 0.8 times more return on investment than Xtrackers International. However, iShares MSCI Emerging is 1.25 times less risky than Xtrackers International. It trades about -0.12 of its potential returns per unit of risk. Xtrackers International Real is currently generating about -0.16 per unit of risk. If you would invest 6,135 in iShares MSCI Emerging on August 28, 2024 and sell it today you would lose (128.00) from holding iShares MSCI Emerging or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Emerging vs. Xtrackers International Real
Performance |
| Timeline |
| iShares MSCI Emerging |
| Xtrackers International |
IShares MSCI and Xtrackers International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Xtrackers International
The main advantage of trading using opposite IShares MSCI and Xtrackers International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Xtrackers International 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 International will offset losses from the drop in Xtrackers International's long position.| IShares MSCI vs. iShares International Developed | IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI Frontier | IShares MSCI vs. iShares MSCI Emerging |
| Xtrackers International vs. iShares International Treasury | Xtrackers International vs. iShares 1 3 Year | Xtrackers International vs. iShares MSCI 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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