Correlation Between DBX ETF and IShares Global

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

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

Diversification Opportunities for DBX ETF and IShares Global

0.68

Correlation Coefficient

DBX ETF  IShares Global

Poor diversification

The 3 months correlation between DBX and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and iShares Global Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Timber and DBX ETF 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 DBX ETF Trust are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Timber has no effect on the direction of DBX ETF i.e., DBX ETF and IShares Global go up and down completely randomly.

Pair Corralation between DBX ETF and IShares Global

Given the investment horizon of 90 days DBX ETF is expected to generate 2.03 times less return on investment than IShares Global. But when comparing it to its historical volatility, DBX ETF Trust is 1.17 times less risky than IShares Global. It trades about 0.05 of its potential returns per unit of risk. iShares Global Timber is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,487  in iShares Global Timber on December 19, 2024 and sell it today you would earn a total of  343.00  from holding iShares Global Timber or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

DBX ETF Trust  vs.  iShares Global Timber

DBX ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DBX ETF Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, DBX ETF is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Global Timber

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Timber are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Global is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DBX ETF and IShares Global

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

The idea behind DBX ETF Trust and iShares Global Timber 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.