Correlation Between IShares MSCI and Xtrackers
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Xtrackers 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 MSCI and Xtrackers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI USA and Xtrackers SP 500, you can compare the effects of market volatilities on IShares MSCI and Xtrackers 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 MSCI with a short position of Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Xtrackers.
Diversification Opportunities for IShares MSCI and Xtrackers
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 and IShares MSCI 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 MSCI USA are associated (or correlated) with Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of IShares MSCI i.e., IShares MSCI and Xtrackers go up and down completely randomly.
Pair Corralation between IShares MSCI and Xtrackers
Given the investment horizon of 90 days iShares MSCI USA is expected to generate 0.95 times more return on investment than Xtrackers. However, iShares MSCI USA is 1.06 times less risky than Xtrackers. It trades about 0.22 of its potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.13 per unit of risk. If you would invest 12,044 in iShares MSCI USA on August 27, 2024 and sell it today you would earn a total of 471.00 from holding iShares MSCI USA or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI USA vs. Xtrackers SP 500
Performance |
| Timeline |
| iShares MSCI USA |
| Xtrackers SP 500 |
IShares MSCI and Xtrackers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Xtrackers
The main advantage of trading using opposite IShares MSCI and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Xtrackers 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 will offset losses from the drop in Xtrackers' long position.| IShares MSCI vs. Morningstar Unconstrained Allocation | IShares MSCI vs. High Yield Municipal Fund | IShares MSCI vs. Via Renewables | IShares MSCI vs. Knife River |
| Xtrackers vs. Morningstar Unconstrained Allocation | Xtrackers vs. High Yield Municipal Fund | Xtrackers vs. Via Renewables | Xtrackers vs. Knife River |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |