Correlation Between DBX ETF and IShares Trust
Can any of the company-specific risk be diversified away by investing in both DBX ETF and IShares Trust 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 DBX ETF and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBX ETF Trust and iShares Trust, you can compare the effects of market volatilities on DBX ETF and IShares Trust 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 DBX ETF with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and IShares Trust.
Diversification Opportunities for DBX ETF and IShares Trust
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DBX and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and DBX ETF 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 DBX ETF Trust are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of DBX ETF i.e., DBX ETF and IShares Trust go up and down completely randomly.
Pair Corralation between DBX ETF and IShares Trust
Given the investment horizon of 90 days DBX ETF is expected to generate 3.54 times less return on investment than IShares Trust. In addition to that, DBX ETF is 1.22 times more volatile than iShares Trust. It trades about 0.04 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.17 per unit of volatility. If you would invest 2,402 in iShares Trust on September 2, 2024 and sell it today you would earn a total of 786.00 from holding iShares Trust or generate 32.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 56.45% |
| Values | Daily Returns |
DBX ETF Trust vs. iShares Trust
Performance |
| Timeline |
| DBX ETF Trust |
| iShares Trust |
DBX ETF and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBX ETF and IShares Trust
The main advantage of trading using opposite DBX ETF and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| DBX ETF vs. Franklin Templeton ETF | DBX ETF vs. Altrius Global Dividend | DBX ETF vs. Invesco Exchange Traded | DBX ETF vs. Franklin International Core |
| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. Akros Monthly Payout | IShares Trust vs. Northern Lights |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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