Correlation Between Xtrackers MSCI and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and IShares ESG 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 Xtrackers MSCI and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI USA and iShares ESG Aware, you can compare the effects of market volatilities on Xtrackers MSCI and IShares ESG 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 Xtrackers MSCI with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and IShares ESG.
Diversification Opportunities for Xtrackers MSCI and IShares ESG
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and IShares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI USA and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and Xtrackers 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 Xtrackers MSCI USA are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and IShares ESG go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and IShares ESG
Given the investment horizon of 90 days Xtrackers MSCI is expected to generate 3.38 times less return on investment than IShares ESG. But when comparing it to its historical volatility, Xtrackers MSCI USA is 1.05 times less risky than IShares ESG. It trades about 0.06 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,347 in iShares ESG Aware on November 9, 2024 and sell it today you would earn a total of 140.00 from holding iShares ESG Aware or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI USA vs. iShares ESG Aware
Performance |
| Timeline |
| Xtrackers MSCI USA |
| iShares ESG Aware |
Xtrackers MSCI and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and IShares ESG
The main advantage of trading using opposite Xtrackers MSCI and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| Xtrackers MSCI vs. iShares ESG MSCI | Xtrackers MSCI vs. Xtrackers SP 500 | Xtrackers MSCI vs. iShares MSCI USA | Xtrackers MSCI vs. Vanguard ESG International |
| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG USD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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