Correlation Between Xtrackers USD and IShares Broad
Can any of the company-specific risk be diversified away by investing in both Xtrackers USD and IShares Broad 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 Broad 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 Broad USD, you can compare the effects of market volatilities on Xtrackers USD and IShares Broad 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 Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers USD and IShares Broad.
Diversification Opportunities for Xtrackers USD and IShares Broad
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Xtrackers and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD 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 Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and IShares Broad go up and down completely randomly.
Pair Corralation between Xtrackers USD and IShares Broad
Given the investment horizon of 90 days Xtrackers USD High is expected to generate 1.03 times more return on investment than IShares Broad. However, Xtrackers USD is 1.03 times more volatile than iShares Broad USD. It trades about 0.16 of its potential returns per unit of risk. iShares Broad USD is currently generating about 0.16 per unit of risk. If you would invest 3,386 in Xtrackers USD High on August 27, 2024 and sell it today you would earn a total of 266.00 from holding Xtrackers USD High or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers USD High vs. iShares Broad USD
Performance |
| Timeline |
| Xtrackers USD High |
| iShares Broad USD |
Xtrackers USD and IShares Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers USD and IShares Broad
The main advantage of trading using opposite Xtrackers USD and IShares Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD position performs unexpectedly, IShares Broad 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 Broad will offset losses from the drop in IShares Broad's long position.| Xtrackers USD vs. First Trust Senior | Xtrackers USD vs. First Trust Low | Xtrackers USD vs. First Trust Enhanced | Xtrackers USD vs. First Trust TCW |
| IShares Broad vs. First Trust Senior | IShares Broad vs. First Trust Low | IShares Broad vs. First Trust Enhanced | IShares Broad 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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