Correlation Between IShares Core and Xtrackers Switzerland
Can any of the company-specific risk be diversified away by investing in both IShares Core and Xtrackers Switzerland 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 Core and Xtrackers Switzerland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SPI and Xtrackers Switzerland UCITS, you can compare the effects of market volatilities on IShares Core and Xtrackers Switzerland 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 Core with a short position of Xtrackers Switzerland. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Xtrackers Switzerland.
Diversification Opportunities for IShares Core and Xtrackers Switzerland
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Xtrackers is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SPI and Xtrackers Switzerland UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Switzerland and IShares Core 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 Core SPI are associated (or correlated) with Xtrackers Switzerland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Switzerland has no effect on the direction of IShares Core i.e., IShares Core and Xtrackers Switzerland go up and down completely randomly.
Pair Corralation between IShares Core and Xtrackers Switzerland
Assuming the 90 days trading horizon iShares Core SPI is expected to generate 0.96 times more return on investment than Xtrackers Switzerland. However, iShares Core SPI is 1.04 times less risky than Xtrackers Switzerland. It trades about 0.0 of its potential returns per unit of risk. Xtrackers Switzerland UCITS is currently generating about -0.02 per unit of risk. If you would invest 13,737 in iShares Core SPI on January 19, 2024 and sell it today you would lose (117.00) from holding iShares Core SPI or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SPI vs. Xtrackers Switzerland UCITS
Performance |
| Timeline |
| iShares Core SPI |
| Xtrackers Switzerland |
IShares Core and Xtrackers Switzerland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Xtrackers Switzerland
The main advantage of trading using opposite IShares Core and Xtrackers Switzerland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Xtrackers Switzerland 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 Switzerland will offset losses from the drop in Xtrackers Switzerland's long position.The idea behind iShares Core SPI and Xtrackers Switzerland UCITS 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.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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