Correlation Between LG Longer and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both LG Longer 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 LG Longer and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Longer Dated and Xtrackers MSCI, you can compare the effects of market volatilities on LG Longer 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 LG Longer with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Longer and Xtrackers MSCI.
Diversification Opportunities for LG Longer and Xtrackers MSCI
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between COMF and Xtrackers is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding LG Longer Dated and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI and LG Longer 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 LG Longer Dated 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 has no effect on the direction of LG Longer i.e., LG Longer and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between LG Longer and Xtrackers MSCI
Assuming the 90 days trading horizon LG Longer Dated is expected to generate 0.54 times more return on investment than Xtrackers MSCI. However, LG Longer Dated is 1.84 times less risky than Xtrackers MSCI. It trades about -0.1 of its potential returns per unit of risk. Xtrackers MSCI is currently generating about -0.14 per unit of risk. If you would invest 2,277 in LG Longer Dated on September 4, 2024 and sell it today you would lose (33.00) from holding LG Longer Dated or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Longer Dated vs. Xtrackers MSCI
Performance |
| Timeline |
| LG Longer Dated |
| Xtrackers MSCI |
LG Longer and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Longer and Xtrackers MSCI
The main advantage of trading using opposite LG Longer and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Longer 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.| LG Longer vs. Leverage Shares 3x | LG Longer vs. WisdomTree Natural Gas | LG Longer vs. Leverage Shares 3x | LG Longer vs. GraniteShares 3x Short |
| Xtrackers MSCI vs. WisdomTree Natural Gas | Xtrackers MSCI vs. WisdomTree Natural Gas | Xtrackers MSCI vs. Leverage Shares 2x | Xtrackers MSCI vs. WisdomTree Silver 3x |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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