Correlation Between IShares IBoxx and Xtrackers High
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Xtrackers High 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 High 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 High Beta, you can compare the effects of market volatilities on IShares IBoxx and Xtrackers High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Xtrackers High.
Diversification Opportunities for IShares IBoxx and Xtrackers High
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Xtrackers is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Xtrackers High Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers High 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers High Beta has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Xtrackers High go up and down completely randomly.
Pair Corralation between IShares IBoxx and Xtrackers High
Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.21 times less return on investment than Xtrackers High. But when comparing it to its historical volatility, iShares iBoxx High is 1.07 times less risky than Xtrackers High. It trades about 0.15 of its potential returns per unit of risk. Xtrackers High Beta is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,196 in Xtrackers High Beta on August 25, 2024 and sell it today you would earn a total of 34.00 from holding Xtrackers High Beta or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Xtrackers High Beta
Performance |
| Timeline |
| iShares iBoxx High |
| Xtrackers High Beta |
IShares IBoxx and Xtrackers High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Xtrackers High
The main advantage of trading using opposite IShares IBoxx and Xtrackers High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Xtrackers High 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 High will offset losses from the drop in Xtrackers High's long position.| IShares IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year |
| Xtrackers High vs. First Trust Senior | Xtrackers High vs. First Trust Low | Xtrackers High vs. First Trust Enhanced | Xtrackers High vs. First Trust TCW |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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