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 Eurozone, 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
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and Xtrackers MSCI Eurozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Eurozone 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 Eurozone 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 Hedged is expected to generate 0.99 times more return on investment than Xtrackers MSCI. However, iShares Currency Hedged is 1.01 times less risky than Xtrackers MSCI. It trades about 0.0 of its potential returns per unit of risk. Xtrackers MSCI Eurozone is currently generating about -0.03 per unit of risk. If you would invest 3,570 in iShares Currency Hedged on September 3, 2024 and sell it today you would earn a total of 0.00 from holding iShares Currency Hedged or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Currency Hedged vs. Xtrackers MSCI Eurozone
Performance |
| Timeline |
| iShares Currency Hedged |
| Xtrackers MSCI Eurozone |
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. Vanguard FTSE Pacific | IShares Currency vs. Vanguard FTSE Emerging | IShares Currency vs. Vanguard FTSE All World | IShares Currency vs. Vanguard FTSE Developed |
| Xtrackers MSCI vs. Xtrackers MSCI Europe | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. iShares Currency Hedged | Xtrackers MSCI vs. WisdomTree Europe Hedged |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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