Correlation Between Xtrackers MSCI and IShares Developed
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and IShares Developed 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 Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI World and iShares Developed Markets, you can compare the effects of market volatilities on Xtrackers MSCI and IShares Developed 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 Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and IShares Developed.
Diversification Opportunities for Xtrackers MSCI and IShares Developed
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and IShares is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI World and iShares Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Developed Markets 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 World are associated (or correlated) with IShares Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Developed Markets has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and IShares Developed go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and IShares Developed
Assuming the 90 days trading horizon Xtrackers MSCI World is expected to generate 1.08 times more return on investment than IShares Developed. However, Xtrackers MSCI is 1.08 times more volatile than iShares Developed Markets. It trades about 0.34 of its potential returns per unit of risk. iShares Developed Markets is currently generating about 0.11 per unit of risk. If you would invest 2,314 in Xtrackers MSCI World on November 2, 2024 and sell it today you would earn a total of 161.00 from holding Xtrackers MSCI World or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI World vs. iShares Developed Markets
Performance |
| Timeline |
| Xtrackers MSCI World |
| iShares Developed Markets |
Xtrackers MSCI and IShares Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and IShares Developed
The main advantage of trading using opposite Xtrackers MSCI and IShares Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, IShares Developed 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 Developed will offset losses from the drop in IShares Developed's long position.| Xtrackers MSCI vs. Xtrackers MSCI USA | Xtrackers MSCI vs. Xtrackers USD Corporate | Xtrackers MSCI vs. Xtrackers MSCI AC | Xtrackers MSCI vs. Xtrackers MSCI World |
| IShares Developed vs. iShares Core MSCI | IShares Developed vs. iShares European Property | IShares Developed vs. iShares Core CHF | IShares Developed vs. Vanguard FTSE Developed |
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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