Correlation Between BB Biotech and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both BB Biotech 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 BB Biotech and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Biotech AG and Xtrackers MSCI China, you can compare the effects of market volatilities on BB Biotech 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 BB Biotech with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and Xtrackers MSCI.
Diversification Opportunities for BB Biotech and Xtrackers MSCI
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BION and Xtrackers is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and Xtrackers MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI China and BB Biotech 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 BB Biotech AG 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 China has no effect on the direction of BB Biotech i.e., BB Biotech and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between BB Biotech and Xtrackers MSCI
Assuming the 90 days trading horizon BB Biotech AG is expected to generate 0.79 times more return on investment than Xtrackers MSCI. However, BB Biotech AG is 1.27 times less risky than Xtrackers MSCI. It trades about 0.05 of its potential returns per unit of risk. Xtrackers MSCI China is currently generating about 0.02 per unit of risk. If you would invest 3,675 in BB Biotech AG on August 31, 2024 and sell it today you would earn a total of 60.00 from holding BB Biotech AG or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BB Biotech AG vs. Xtrackers MSCI China
Performance |
| Timeline |
| BB Biotech AG |
| Xtrackers MSCI China |
BB Biotech and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and Xtrackers MSCI
The main advantage of trading using opposite BB Biotech and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech 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.| BB Biotech vs. Swiss Life Holding | BB Biotech vs. Swiss Re AG | BB Biotech vs. Helvetia Holding AG | BB Biotech vs. Partners Group Holding |
| Xtrackers MSCI vs. UBSFund Solutions MSCI | Xtrackers MSCI vs. Vanguard SP 500 | Xtrackers MSCI vs. iShares VII PLC | Xtrackers MSCI vs. iShares Core SP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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