Correlation Between Xtrackers and IShares Core
Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 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 II and iShares Core SP, you can compare the effects of market volatilities on Xtrackers 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 with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and IShares Core.
Diversification Opportunities for Xtrackers and IShares Core
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and IShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II 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 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 II 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 i.e., Xtrackers and IShares Core go up and down completely randomly.
Pair Corralation between Xtrackers and IShares Core
Assuming the 90 days trading horizon Xtrackers II is expected to generate 52.24 times more return on investment than IShares Core. However, Xtrackers is 52.24 times more volatile than iShares Core SP. It trades about 0.04 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.1 per unit of risk. If you would invest 916.00 in Xtrackers II on August 24, 2024 and sell it today you would lose (165.00) from holding Xtrackers II or give up 18.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Xtrackers II vs. iShares Core SP
Performance |
| Timeline |
| Xtrackers II |
| iShares Core SP |
Xtrackers and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and IShares Core
The main advantage of trading using opposite Xtrackers and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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 vs. UBS Fund Solutions | Xtrackers vs. Xtrackers Nikkei 225 | Xtrackers vs. iShares VII PLC | Xtrackers vs. SPDR Gold Shares |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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