Correlation Between Xtrackers Harvest and IShares MSCI

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

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

Diversification Opportunities for Xtrackers Harvest and IShares MSCI

0.97

Correlation Coefficient

Xtrackers Harvest  IShares MSCI

Almost no diversification

The 3 months correlation between Xtrackers and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Harvest CSI and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China and Xtrackers Harvest 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 Harvest CSI are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of Xtrackers Harvest i.e., Xtrackers Harvest and IShares MSCI go up and down completely randomly.

Pair Corralation between Xtrackers Harvest and IShares MSCI

Given the investment horizon of 90 days Xtrackers Harvest CSI is expected to generate 1.14 times more return on investment than IShares MSCI. However, Xtrackers Harvest is 1.14 times more volatile than iShares MSCI China. It trades about 0.08 of its potential returns per unit of risk. iShares MSCI China is currently generating about 0.08 per unit of risk. If you would invest  2,351  in Xtrackers Harvest CSI on August 30, 2024 and sell it today you would earn a total of  360.00  from holding Xtrackers Harvest CSI or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Xtrackers Harvest CSI  vs.  iShares MSCI China

Xtrackers Harvest CSI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Harvest CSI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Xtrackers Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers Harvest and IShares MSCI

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

The idea behind Xtrackers Harvest CSI and iShares MSCI China 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.