Correlation Between Xtrackers USD and IShares Interest
Can any of the company-specific risk be diversified away by investing in both Xtrackers USD and IShares Interest 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 Xtrackers USD and IShares Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers USD High and iShares Interest Rate, you can compare the effects of market volatilities on Xtrackers USD and IShares Interest 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 Xtrackers USD with a short position of IShares Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers USD and IShares Interest.
Diversification Opportunities for Xtrackers USD and IShares Interest
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest Rate and Xtrackers USD 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 Xtrackers USD High are associated (or correlated) with IShares Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and IShares Interest go up and down completely randomly.
Pair Corralation between Xtrackers USD and IShares Interest
Given the investment horizon of 90 days Xtrackers USD is expected to generate 2.33 times less return on investment than IShares Interest. But when comparing it to its historical volatility, Xtrackers USD High is 1.04 times less risky than IShares Interest. It trades about 0.14 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 8,569 in iShares Interest Rate on August 23, 2024 and sell it today you would earn a total of 139.00 from holding iShares Interest Rate or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers USD High vs. iShares Interest Rate
Performance |
| Timeline |
| Xtrackers USD High |
| iShares Interest Rate |
Xtrackers USD and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers USD and IShares Interest
The main advantage of trading using opposite Xtrackers USD and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD position performs unexpectedly, IShares Interest 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 IShares Interest will offset losses from the drop in IShares Interest's long position.| Xtrackers USD vs. SPDR Bloomberg Short | Xtrackers USD vs. VanEck JP Morgan | Xtrackers USD vs. iShares 0 5 Year |
| IShares Interest vs. SPDR Bloomberg Short | IShares Interest vs. VanEck JP Morgan | IShares Interest 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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