Correlation Between IShares IBoxx and Xtrackers Low
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx 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 IBoxx 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 iBoxx High and Xtrackers Low Beta, you can compare the effects of market volatilities on IShares IBoxx 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 IBoxx with a short position of Xtrackers Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Xtrackers Low.
Diversification Opportunities for IShares IBoxx and Xtrackers Low
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Xtrackers is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx 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 IBoxx 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 iBoxx 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 IBoxx i.e., IShares IBoxx and Xtrackers Low go up and down completely randomly.
Pair Corralation between IShares IBoxx and Xtrackers Low
Considering the 90-day investment horizon iShares iBoxx High is expected to generate 1.03 times more return on investment than Xtrackers Low. However, IShares IBoxx is 1.03 times more volatile than Xtrackers Low Beta. It trades about 0.22 of its potential returns per unit of risk. Xtrackers Low Beta is currently generating about 0.12 per unit of risk. If you would invest 7,874 in iShares iBoxx High on August 24, 2024 and sell it today you would earn a total of 77.00 from holding iShares iBoxx High or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Xtrackers Low Beta
Performance |
| Timeline |
| iShares iBoxx High |
| Xtrackers Low Beta |
IShares IBoxx and Xtrackers Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Xtrackers Low
The main advantage of trading using opposite IShares IBoxx and Xtrackers Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx 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 IBoxx vs. SPDR Bloomberg Short | IShares IBoxx vs. VanEck JP Morgan | IShares IBoxx vs. iShares 0 5 Year |
| Xtrackers Low vs. SPDR Bloomberg Short | Xtrackers Low vs. VanEck JP Morgan | Xtrackers Low vs. iShares 0 5 Year |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |