Correlation Between Xtrackers Nikkei and IShares VII
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei and IShares VII 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 VII 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 VII PLC, you can compare the effects of market volatilities on Xtrackers Nikkei and IShares VII 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 VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and IShares VII.
Diversification Opportunities for Xtrackers Nikkei and IShares VII
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC 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 VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and IShares VII go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and IShares VII
Assuming the 90 days trading horizon Xtrackers Nikkei 225 is expected to under-perform the IShares VII. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers Nikkei 225 is 1.11 times less risky than IShares VII. The etf trades about -0.01 of its potential returns per unit of risk. The iShares VII PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 24,495 in iShares VII PLC on November 9, 2024 and sell it today you would earn a total of 25.00 from holding iShares VII PLC or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. iShares VII PLC
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| iShares VII PLC |
Xtrackers Nikkei and IShares VII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and IShares VII
The main advantage of trading using opposite Xtrackers Nikkei and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, IShares VII 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 VII will offset losses from the drop in IShares VII's long position.| Xtrackers Nikkei vs. Xtrackers II Global | Xtrackers Nikkei vs. Xtrackers FTSE | Xtrackers Nikkei vs. Xtrackers SP 500 | Xtrackers Nikkei vs. Xtrackers MSCI |
| IShares VII vs. iShares Govt Bond | IShares VII vs. iShares Global AAA AA | IShares VII vs. iShares Smart City | IShares VII 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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