Correlation Between IShares Core and Xtrackers ShortDAX
Can any of the company-specific risk be diversified away by investing in both IShares Core and Xtrackers ShortDAX 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 ShortDAX 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 ShortDAX, you can compare the effects of market volatilities on IShares Core and Xtrackers ShortDAX 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 ShortDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Xtrackers ShortDAX.
Diversification Opportunities for IShares Core and Xtrackers ShortDAX
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and Xtrackers is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Xtrackers ShortDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ShortDAX 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 ShortDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ShortDAX has no effect on the direction of IShares Core i.e., IShares Core and Xtrackers ShortDAX go up and down completely randomly.
Pair Corralation between IShares Core and Xtrackers ShortDAX
Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the Xtrackers ShortDAX. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.76 times less risky than Xtrackers ShortDAX. The etf trades about -0.08 of its potential returns per unit of risk. The Xtrackers ShortDAX is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Xtrackers ShortDAX on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Xtrackers ShortDAX or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Xtrackers ShortDAX
Performance |
| Timeline |
| iShares Core MSCI |
| Xtrackers ShortDAX |
IShares Core and Xtrackers ShortDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Xtrackers ShortDAX
The main advantage of trading using opposite IShares Core and Xtrackers ShortDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Xtrackers ShortDAX 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 ShortDAX will offset losses from the drop in Xtrackers ShortDAX's long position.| IShares Core vs. UBS Fund Solutions | IShares Core vs. Xtrackers II | IShares Core vs. Xtrackers Nikkei 225 | IShares Core vs. iShares VII PLC |
| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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