Correlation Between IShares JP and Xtrackers MSCI

Can any of the company-specific risk be diversified away by investing in both IShares JP and Xtrackers MSCI 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 JP and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares JP Morgan and Xtrackers MSCI, you can compare the effects of market volatilities on IShares JP and Xtrackers MSCI 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 JP with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and Xtrackers MSCI.

Diversification Opportunities for IShares JP and Xtrackers MSCI

-0.73

Correlation Coefficient

IShares JP  Xtrackers MSCI

Pay attention - limited upside

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 JP Morgan and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI and IShares JP 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 JP Morgan are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI has no effect on the direction of IShares JP i.e., IShares JP and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between IShares JP and Xtrackers MSCI

Assuming the 90 days trading horizon iShares JP Morgan is expected to generate 0.47 times more return on investment than Xtrackers MSCI. However, iShares JP Morgan is 2.11 times less risky than Xtrackers MSCI. It trades about 0.36 of its potential returns per unit of risk. Xtrackers MSCI is currently generating about -0.08 per unit of risk. If you would invest  3,301  in iShares JP Morgan on October 26, 2024 and sell it today you would earn a total of  101.00  from holding iShares JP Morgan or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares JP Morgan  vs.  Xtrackers MSCI

iShares JP Morgan

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares JP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Xtrackers MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares JP and Xtrackers MSCI

The main advantage of trading using opposite IShares JP and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP position performs unexpectedly, Xtrackers MSCI 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 MSCI will offset losses from the drop in Xtrackers MSCI's long position.

The idea behind iShares JP Morgan and Xtrackers MSCI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.