Correlation Between IShares Currency and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Currency and Xtrackers 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 IShares Currency and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Currency Hedged and Xtrackers MSCI Japan, you can compare the effects of market volatilities on IShares Currency and Xtrackers 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 IShares Currency with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and Xtrackers MSCI.
Diversification Opportunities for IShares Currency and Xtrackers MSCI
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Xtrackers is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and Xtrackers MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Japan and IShares Currency 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 Currency Hedged are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Japan has no effect on the direction of IShares Currency i.e., IShares Currency and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between IShares Currency and Xtrackers MSCI
Given the investment horizon of 90 days IShares Currency is expected to generate 1.34 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, iShares Currency Hedged is 1.84 times less risky than Xtrackers MSCI. It trades about 0.1 of its potential returns per unit of risk. Xtrackers MSCI Japan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,034 in Xtrackers MSCI Japan on August 25, 2024 and sell it today you would earn a total of 1,359 from holding Xtrackers MSCI Japan or generate 22.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Currency Hedged vs. Xtrackers MSCI Japan
Performance |
| Timeline |
| iShares Currency Hedged |
| Xtrackers MSCI Japan |
IShares Currency and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Currency and Xtrackers MSCI
The main advantage of trading using opposite IShares Currency and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Currency position performs unexpectedly, Xtrackers 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. Xtrackers MSCI EAFE |
| Xtrackers MSCI vs. iShares MSCI South | Xtrackers MSCI vs. iShares MSCI Hong | Xtrackers MSCI vs. iShares MSCI Taiwan | Xtrackers MSCI vs. iShares MSCI Germany |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |