Correlation Between Xtrackers MSCI and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and WisdomTree Europe 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 Xtrackers MSCI and WisdomTree Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI All and WisdomTree Europe Hedged, you can compare the effects of market volatilities on Xtrackers MSCI and WisdomTree Europe 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 Xtrackers MSCI with a short position of WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and WisdomTree Europe.
Diversification Opportunities for Xtrackers MSCI and WisdomTree Europe
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and WisdomTree is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI All and WisdomTree Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Hedged and Xtrackers 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 Xtrackers MSCI All are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Hedged has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and WisdomTree Europe go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and WisdomTree Europe
Given the investment horizon of 90 days Xtrackers MSCI All is expected to generate 0.92 times more return on investment than WisdomTree Europe. However, Xtrackers MSCI All is 1.09 times less risky than WisdomTree Europe. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Europe Hedged is currently generating about 0.02 per unit of risk. If you would invest 3,252 in Xtrackers MSCI All on September 3, 2024 and sell it today you would earn a total of 189.00 from holding Xtrackers MSCI All or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI All vs. WisdomTree Europe Hedged
Performance |
| Timeline |
| Xtrackers MSCI All |
| WisdomTree Europe Hedged |
Xtrackers MSCI and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and WisdomTree Europe
The main advantage of trading using opposite Xtrackers MSCI and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, WisdomTree Europe 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 WisdomTree Europe will offset losses from the drop in WisdomTree Europe's long position.| Xtrackers MSCI vs. Xtrackers MSCI Emerging | Xtrackers MSCI vs. Xtrackers MSCI Eurozone | Xtrackers MSCI vs. WisdomTree Dynamic Currency | Xtrackers MSCI vs. Xtrackers MSCI Europe |
| WisdomTree Europe vs. WisdomTree Europe Quality | WisdomTree Europe vs. iShares Currency Hedged | WisdomTree Europe vs. Xtrackers MSCI Europe | WisdomTree Europe vs. WisdomTree Europe Hedged |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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