Correlation Between IShares International and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both IShares International 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 International 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 International Select and Xtrackers MSCI EAFE, you can compare the effects of market volatilities on IShares International 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 International with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and Xtrackers MSCI.
Diversification Opportunities for IShares International and Xtrackers MSCI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Xtrackers is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Select and Xtrackers MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EAFE and IShares International 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 International Select 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 EAFE has no effect on the direction of IShares International i.e., IShares International and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between IShares International and Xtrackers MSCI
Considering the 90-day investment horizon iShares International Select is expected to generate 1.06 times more return on investment than Xtrackers MSCI. However, IShares International is 1.06 times more volatile than Xtrackers MSCI EAFE. It trades about 0.13 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about 0.13 per unit of risk. If you would invest 2,705 in iShares International Select on January 29, 2024 and sell it today you would earn a total of 101.00 from holding iShares International Select or generate 3.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 97.73% |
Values | Daily Returns |
iShares International Select vs. Xtrackers MSCI EAFE
Performance |
Timeline |
iShares International |
Xtrackers MSCI EAFE |
IShares International and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares International and Xtrackers MSCI
The main advantage of trading using opposite IShares International and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International 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.IShares International vs. iShares Core High | IShares International vs. SPDR SP International | IShares International vs. iShares Select Dividend | IShares International vs. iShares Emerging Markets |
Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Fidelity International High | Xtrackers MSCI vs. Global X MSCI | Xtrackers MSCI vs. Xtrackers USD High |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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