Correlation Between IShares Core and Xtrackers Emerging
Can any of the company-specific risk be diversified away by investing in both IShares Core and Xtrackers Emerging 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 Core and Xtrackers Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Xtrackers Emerging Markets, you can compare the effects of market volatilities on IShares Core and Xtrackers Emerging 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 Core with a short position of Xtrackers Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Xtrackers Emerging.
Diversification Opportunities for IShares Core and Xtrackers Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Xtrackers is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Xtrackers Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Emerging and IShares Core 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 Core MSCI are associated (or correlated) with Xtrackers Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Emerging has no effect on the direction of IShares Core i.e., IShares Core and Xtrackers Emerging go up and down completely randomly.
Pair Corralation between IShares Core and Xtrackers Emerging
Given the investment horizon of 90 days IShares Core is expected to generate 1.2 times less return on investment than Xtrackers Emerging. But when comparing it to its historical volatility, iShares Core MSCI is 1.08 times less risky than Xtrackers Emerging. It trades about 0.04 of its potential returns per unit of risk. Xtrackers Emerging Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,722 in Xtrackers Emerging Markets on August 26, 2024 and sell it today you would earn a total of 357.00 from holding Xtrackers Emerging Markets or generate 13.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Xtrackers Emerging Markets
Performance |
| Timeline |
| iShares Core MSCI |
| Xtrackers Emerging |
IShares Core and Xtrackers Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Xtrackers Emerging
The main advantage of trading using opposite IShares Core and Xtrackers Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Xtrackers Emerging 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 Emerging will offset losses from the drop in Xtrackers Emerging's long position.| IShares Core vs. Freedom Day Dividend | IShares Core vs. Davis Select International | IShares Core vs. iShares MSCI China | IShares Core vs. SmartETFs Dividend Builder |
| Xtrackers Emerging vs. Xtrackers MSCI Emerging | Xtrackers Emerging vs. FlexShares Morningstar Emerging | Xtrackers Emerging vs. Invesco SP Emerging | Xtrackers Emerging vs. First Trust Emerging |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |