Correlation Between Xtrackers and IShares SP

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

By analyzing existing cross correlation between Xtrackers SP 500 and iShares SP SmallCap, you can compare the effects of market volatilities on Xtrackers and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and IShares SP.

Diversification Opportunities for Xtrackers and IShares SP

0.0

Correlation Coefficient

Xtrackers  IShares SP

Pay attention - limited upside

The 3 months correlation between Xtrackers and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 and iShares SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP SmallCap 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 SP 500 are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP SmallCap has no effect on the direction of Xtrackers i.e., Xtrackers and IShares SP go up and down completely randomly.

Pair Corralation between Xtrackers and IShares SP

If you would invest  23,065  in Xtrackers SP 500 on October 21, 2024 and sell it today you would earn a total of  1,139  from holding Xtrackers SP 500 or generate 4.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Xtrackers SP 500  vs.  iShares SP SmallCap

Xtrackers SP 500

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Xtrackers is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares SP SmallCap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares SP SmallCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares SP is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xtrackers and IShares SP

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

The idea behind Xtrackers SP 500 and iShares SP SmallCap 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.