Correlation Between Global X and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Alternative and Xtrackers MSCI EAFE, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Xtrackers MSCI.
Diversification Opportunities for Global X and Xtrackers MSCI
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Xtrackers is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Global X Alternative 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 Global X 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 Global X Alternative 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 Global X i.e., Global X and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Global X and Xtrackers MSCI
Given the investment horizon of 90 days Global X Alternative is expected to generate 0.69 times more return on investment than Xtrackers MSCI. However, Global X Alternative is 1.45 times less risky than Xtrackers MSCI. It trades about 0.09 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about 0.04 per unit of risk. If you would invest 1,060 in Global X Alternative on September 14, 2024 and sell it today you would earn a total of 128.00 from holding Global X Alternative or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Alternative vs. Xtrackers MSCI EAFE
Performance |
| Timeline |
| Global X Alternative |
| Xtrackers MSCI EAFE |
Global X and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Xtrackers MSCI
The main advantage of trading using opposite Global X and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. First Trust Multi Asset | Global X vs. Collaborative Investment Series | Global X vs. EA Series Trust | Global X vs. Aptus Defined Risk |
| Xtrackers MSCI vs. Fidelity International High | Xtrackers MSCI vs. Global X MSCI | Xtrackers MSCI vs. Xtrackers USD High | Xtrackers MSCI vs. First Trust Dow |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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