Correlation Between Xtrackers Nikkei and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei 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 Nikkei 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 Nikkei 225 and iShares MSCI ACWI, you can compare the effects of market volatilities on Xtrackers Nikkei 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 Nikkei with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and IShares MSCI.
Diversification Opportunities for Xtrackers Nikkei and IShares MSCI
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and iShares MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI ACWI and Xtrackers Nikkei 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 Nikkei 225 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 ACWI has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and IShares MSCI go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and IShares MSCI
Assuming the 90 days trading horizon Xtrackers Nikkei is expected to generate 1.46 times less return on investment than IShares MSCI. In addition to that, Xtrackers Nikkei is 1.55 times more volatile than iShares MSCI ACWI. It trades about 0.11 of its total potential returns per unit of risk. iShares MSCI ACWI is currently generating about 0.24 per unit of volatility. If you would invest 7,833 in iShares MSCI ACWI on September 14, 2024 and sell it today you would earn a total of 935.00 from holding iShares MSCI ACWI or generate 11.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Xtrackers Nikkei 225 vs. iShares MSCI ACWI
Performance |
Timeline |
Xtrackers Nikkei 225 |
iShares MSCI ACWI |
Xtrackers Nikkei and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers Nikkei and IShares MSCI
The main advantage of trading using opposite Xtrackers Nikkei and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei 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.Xtrackers Nikkei vs. UBS Fund Solutions | Xtrackers Nikkei vs. Xtrackers II | Xtrackers Nikkei vs. iShares VII PLC | Xtrackers Nikkei vs. SPDR Gold Shares |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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