Correlation Between IShares IBoxx and Xtrackers USD
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Xtrackers USD 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 IBoxx and Xtrackers USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBoxx Investment and Xtrackers USD High, you can compare the effects of market volatilities on IShares IBoxx and Xtrackers USD 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 IBoxx with a short position of Xtrackers USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Xtrackers USD.
Diversification Opportunities for IShares IBoxx and Xtrackers USD
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Xtrackers is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Xtrackers USD High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers USD High and IShares IBoxx 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 iBoxx Investment are associated (or correlated) with Xtrackers USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers USD High has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Xtrackers USD go up and down completely randomly.
Pair Corralation between IShares IBoxx and Xtrackers USD
Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.88 times less return on investment than Xtrackers USD. In addition to that, IShares IBoxx is 1.36 times more volatile than Xtrackers USD High. It trades about 0.03 of its total potential returns per unit of risk. Xtrackers USD High is currently generating about 0.09 per unit of volatility. If you would invest 3,080 in Xtrackers USD High on September 4, 2024 and sell it today you would earn a total of 577.00 from holding Xtrackers USD High or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx Investment vs. Xtrackers USD High
Performance |
| Timeline |
| iShares iBoxx Investment |
| Xtrackers USD High |
IShares IBoxx and Xtrackers USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Xtrackers USD
The main advantage of trading using opposite IShares IBoxx and Xtrackers USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Xtrackers USD 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 USD will offset losses from the drop in Xtrackers USD's long position.| IShares IBoxx vs. iShares iBoxx High | IShares IBoxx vs. iShares 1 3 Year | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 7 10 Year |
| Xtrackers USD vs. SPDR Bloomberg Emerging | Xtrackers USD vs. iShares Broad USD | Xtrackers USD vs. SPDR Barclays Intermediate | Xtrackers USD vs. Schwab Intermediate Term Treasury |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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