Correlation Between IShares MSCI and Xtrackers Emerging

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

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

Diversification Opportunities for IShares MSCI and Xtrackers Emerging

0.73

Correlation Coefficient

IShares MSCI  Xtrackers Emerging

Poor diversification

The 3 months correlation between IShares and Xtrackers is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Emerging and Xtrackers Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Emerging and IShares MSCI 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 MSCI Emerging are associated (or correlated) with Xtrackers Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Emerging has no effect on the direction of IShares MSCI i.e., IShares MSCI and Xtrackers Emerging go up and down completely randomly.

Pair Corralation between IShares MSCI and Xtrackers Emerging

If you would invest  4,632  in iShares MSCI Emerging on May 6, 2025 and sell it today you would earn a total of  238.00  from holding iShares MSCI Emerging or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.44%
Values	Daily Returns

iShares MSCI Emerging  vs.  Xtrackers Emerging Markets

iShares MSCI Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Emerging are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Xtrackers Emerging

Risk-Adjusted Performance

Good

Over the last 90 days Xtrackers Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, Xtrackers Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares MSCI and Xtrackers Emerging

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

The idea behind iShares MSCI Emerging and Xtrackers Emerging Markets 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.