Correlation Between IShares ESG and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both IShares ESG 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 ESG 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 ESG MSCI and Xtrackers MSCI Emerging, you can compare the effects of market volatilities on IShares ESG 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 ESG with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Xtrackers MSCI.
Diversification Opportunities for IShares ESG and Xtrackers MSCI
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Xtrackers is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG 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 ESG 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 ESG 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 ESG i.e., IShares ESG and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between IShares ESG and Xtrackers MSCI
Given the investment horizon of 90 days IShares ESG is expected to generate 1.15 times less return on investment than Xtrackers MSCI. In addition to that, IShares ESG is 1.12 times more volatile than Xtrackers MSCI Emerging. It trades about 0.05 of its total potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about 0.07 per unit of volatility. If you would invest 2,205 in Xtrackers MSCI Emerging on September 2, 2024 and sell it today you would earn a total of 333.00 from holding Xtrackers MSCI Emerging or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG MSCI vs. Xtrackers MSCI Emerging
Performance |
| Timeline |
| iShares ESG MSCI |
| Xtrackers MSCI Emerging |
IShares ESG and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Xtrackers MSCI
The main advantage of trading using opposite IShares ESG and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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 ESG vs. iShares ESG MSCI | IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Advanced |
| Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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