Correlation Between IShares Edge and Xtrackers Low
Can any of the company-specific risk be diversified away by investing in both IShares Edge and Xtrackers Low 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 Edge and Xtrackers Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Edge High and Xtrackers Low Beta, you can compare the effects of market volatilities on IShares Edge and Xtrackers Low 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 Edge with a short position of Xtrackers Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and Xtrackers Low.
Diversification Opportunities for IShares Edge and Xtrackers Low
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Xtrackers is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge High and Xtrackers Low Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Low Beta and IShares Edge 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 Edge High are associated (or correlated) with Xtrackers Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Low Beta has no effect on the direction of IShares Edge i.e., IShares Edge and Xtrackers Low go up and down completely randomly.
Pair Corralation between IShares Edge and Xtrackers Low
Given the investment horizon of 90 days iShares Edge High is expected to generate 1.2 times more return on investment than Xtrackers Low. However, IShares Edge is 1.2 times more volatile than Xtrackers Low Beta. It trades about 0.18 of its potential returns per unit of risk. Xtrackers Low Beta is currently generating about 0.14 per unit of risk. If you would invest 4,396 in iShares Edge High on September 1, 2024 and sell it today you would earn a total of 399.00 from holding iShares Edge High or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
iShares Edge High vs. Xtrackers Low Beta
Performance |
| Timeline |
| iShares Edge High |
| Xtrackers Low Beta |
IShares Edge and Xtrackers Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and Xtrackers Low
The main advantage of trading using opposite IShares Edge and Xtrackers Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, Xtrackers Low 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 Low will offset losses from the drop in Xtrackers Low's long position.| IShares Edge vs. iShares Edge Investment | IShares Edge vs. iShares Interest Rate | IShares Edge vs. iShares Fallen Angels | IShares Edge vs. iShares Intl High |
| Xtrackers Low vs. Xtrackers High Beta | Xtrackers Low vs. Xtrackers Short Duration | Xtrackers Low vs. Goldman Sachs Access | Xtrackers Low vs. FlexShares High Yield |
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 Stocks Directory module to find actively traded stocks across global markets.
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