Correlation Between IShares Trust and Xtrackers High
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 Trust 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 Trust and Xtrackers High Beta, you can compare the effects of market volatilities on IShares Trust 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 Trust with a short position of Xtrackers High. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Xtrackers High.
Diversification Opportunities for IShares Trust and Xtrackers High
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Xtrackers is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 Trust 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 Trust 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 Trust i.e., IShares Trust and Xtrackers High go up and down completely randomly.
Pair Corralation between IShares Trust and Xtrackers High
Given the investment horizon of 90 days IShares Trust is expected to generate 1.87 times less return on investment than Xtrackers High. But when comparing it to its historical volatility, iShares Trust is 1.76 times less risky than Xtrackers High. It trades about 0.12 of its potential returns per unit of risk. Xtrackers High Beta is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,339 in Xtrackers High Beta on November 29, 2024 and sell it today you would earn a total of 903.05 from holding Xtrackers High Beta or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Xtrackers High Beta
Performance |
| Timeline |
| iShares Trust |
| Xtrackers High Beta |
IShares Trust and Xtrackers High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Xtrackers High
The main advantage of trading using opposite IShares Trust and Xtrackers High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. Simplify Volatility Premium | IShares Trust vs. Tidal Trust II |
| Xtrackers High vs. Xtrackers Short Duration | Xtrackers High vs. FlexShares High Yield | Xtrackers High vs. Xtrackers Low Beta | Xtrackers High vs. iShares Edge High |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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