Correlation Between IShares Europe and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both IShares Europe 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 Europe 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 Europe ETF and Xtrackers MSCI Europe, you can compare the effects of market volatilities on IShares Europe 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 Europe with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Europe and Xtrackers MSCI.
Diversification Opportunities for IShares Europe and Xtrackers MSCI
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Xtrackers is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Europe ETF and Xtrackers MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Europe and IShares Europe 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 Europe ETF 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 Europe has no effect on the direction of IShares Europe i.e., IShares Europe and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between IShares Europe and Xtrackers MSCI
Considering the 90-day investment horizon iShares Europe ETF is expected to under-perform the Xtrackers MSCI. In addition to that, IShares Europe is 1.38 times more volatile than Xtrackers MSCI Europe. It trades about -0.3 of its total potential returns per unit of risk. Xtrackers MSCI Europe is currently generating about -0.21 per unit of volatility. If you would invest 4,241 in Xtrackers MSCI Europe on August 29, 2024 and sell it today you would lose (129.00) from holding Xtrackers MSCI Europe or give up 3.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Europe ETF vs. Xtrackers MSCI Europe
Performance |
| Timeline |
| iShares Europe ETF |
| Xtrackers MSCI Europe |
IShares Europe and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Europe and Xtrackers MSCI
The main advantage of trading using opposite IShares Europe and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Europe 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 Europe vs. iShares MSCI France | IShares Europe vs. iShares MSCI United | IShares Europe vs. iShares MSCI Spain | IShares Europe vs. iShares MSCI Netherlands |
| Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency Hedged | Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. WisdomTree Europe Hedged |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |