Correlation Between Xtrackers Nikkei and IShares Core
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei and IShares Core 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 Nikkei and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Nikkei 225 and iShares Core SP, you can compare the effects of market volatilities on Xtrackers Nikkei and IShares Core 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 Nikkei with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and IShares Core.
Diversification Opportunities for Xtrackers Nikkei and IShares Core
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Xtrackers and IShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and Xtrackers Nikkei 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 Nikkei 225 are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and IShares Core go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and IShares Core
Assuming the 90 days trading horizon Xtrackers Nikkei is expected to generate 2.59 times less return on investment than IShares Core. But when comparing it to its historical volatility, Xtrackers Nikkei 225 is 1.18 times less risky than IShares Core. It trades about 0.14 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 55,940 in iShares Core SP on September 2, 2024 and sell it today you would earn a total of 4,540 from holding iShares Core SP or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. iShares Core SP
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| iShares Core SP |
Xtrackers Nikkei and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and IShares Core
The main advantage of trading using opposite Xtrackers Nikkei and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| Xtrackers Nikkei vs. UBS Fund Solutions | Xtrackers Nikkei vs. iShares VII PLC | Xtrackers Nikkei vs. Vanguard Funds Public | Xtrackers Nikkei vs. iShares Core SP |
| IShares Core vs. iShares Govt Bond | IShares Core vs. iShares Global AAA AA | IShares Core vs. iShares Smart City | IShares Core vs. iShares Broad High |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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