Correlation Between IShares Core and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Core and Xtrackers MSCI 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 MSCI 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 MSCI Emerging, you can compare the effects of market volatilities on IShares Core and Xtrackers MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Xtrackers MSCI.
Diversification Opportunities for IShares Core and Xtrackers MSCI
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Xtrackers is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Xtrackers MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Emerging has no effect on the direction of IShares Core i.e., IShares Core and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between IShares Core and Xtrackers MSCI
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 0.85 times more return on investment than Xtrackers MSCI. However, iShares Core MSCI is 1.17 times less risky than Xtrackers MSCI. It trades about -0.11 of its potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about -0.15 per unit of risk. If you would invest 5,562 in iShares Core MSCI on September 1, 2024 and sell it today you would lose (131.00) from holding iShares Core MSCI or give up 2.36% of portfolio value 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 MSCI Emerging
Performance |
| Timeline |
| iShares Core MSCI |
| Xtrackers MSCI Emerging |
IShares Core and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Xtrackers MSCI
The main advantage of trading using opposite IShares Core and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Xtrackers MSCI 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 MSCI will offset losses from the drop in Xtrackers MSCI's long position.| IShares Core vs. Xtrackers MSCI Emerging | IShares Core vs. FlexShares Morningstar Emerging | IShares Core vs. First Trust Emerging |
| Xtrackers MSCI vs. Xtrackers MSCI Emerging | Xtrackers MSCI vs. FlexShares Morningstar Emerging | Xtrackers MSCI 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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