Correlation Between IShares Equity and Xtrackers USD
Can any of the company-specific risk be diversified away by investing in both IShares Equity and Xtrackers USD 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 IShares Equity and Xtrackers USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Equity Factor and Xtrackers USD High, you can compare the effects of market volatilities on IShares Equity and Xtrackers USD 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 IShares Equity with a short position of Xtrackers USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Equity and Xtrackers USD.
Diversification Opportunities for IShares Equity and Xtrackers USD
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Xtrackers is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares Equity Factor and Xtrackers USD High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers USD High and IShares Equity 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 iShares Equity Factor are associated (or correlated) with Xtrackers USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers USD High has no effect on the direction of IShares Equity i.e., IShares Equity and Xtrackers USD go up and down completely randomly.
Pair Corralation between IShares Equity and Xtrackers USD
Given the investment horizon of 90 days iShares Equity Factor is expected to generate 2.37 times more return on investment than Xtrackers USD. However, IShares Equity is 2.37 times more volatile than Xtrackers USD High. It trades about 0.14 of its potential returns per unit of risk. Xtrackers USD High is currently generating about 0.12 per unit of risk. If you would invest 3,955 in iShares Equity Factor on September 25, 2024 and sell it today you would earn a total of 2,168 from holding iShares Equity Factor or generate 54.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Equity Factor vs. Xtrackers USD High
Performance |
Timeline |
iShares Equity Factor |
Xtrackers USD High |
IShares Equity and Xtrackers USD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Equity and Xtrackers USD
The main advantage of trading using opposite IShares Equity and Xtrackers USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Equity position performs unexpectedly, Xtrackers USD 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 Xtrackers USD will offset losses from the drop in Xtrackers USD's long position.IShares Equity vs. SPDR SP 500 | IShares Equity vs. iShares Core SP | IShares Equity vs. Vanguard Dividend Appreciation | IShares Equity vs. Vanguard Large Cap Index |
Xtrackers USD vs. iShares iBoxx High | Xtrackers USD vs. iShares Broad USD | Xtrackers USD vs. iShares 0 5 Year | Xtrackers USD vs. Xtrackers Low Beta |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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