Correlation Between Xtrackers MSCI and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Avantis 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 Xtrackers MSCI and Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI Emerging and Avantis Emerging Markets, you can compare the effects of market volatilities on Xtrackers MSCI and Avantis 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 Xtrackers MSCI with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Avantis Emerging.
Diversification Opportunities for Xtrackers MSCI and Avantis Emerging
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and Avantis is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets 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 Emerging are associated (or correlated) with Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Avantis Emerging go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Avantis Emerging
Given the investment horizon of 90 days Xtrackers MSCI is expected to generate 92.96 times less return on investment than Avantis Emerging. But when comparing it to its historical volatility, Xtrackers MSCI Emerging is 84.61 times less risky than Avantis Emerging. It trades about 0.07 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Avantis Emerging Markets on September 2, 2024 and sell it today you would earn a total of 5,133 from holding Avantis Emerging Markets or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.77% |
| Values | Daily Returns |
Xtrackers MSCI Emerging vs. Avantis Emerging Markets
Performance |
| Timeline |
| Xtrackers MSCI Emerging |
| Avantis Emerging Markets |
Xtrackers MSCI and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Avantis Emerging
The main advantage of trading using opposite Xtrackers MSCI and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Avantis 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 Avantis Emerging will offset losses from the drop in Avantis Emerging's long position.| Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency Hedged |
| Avantis Emerging vs. Xtrackers MSCI Emerging | Avantis Emerging vs. FlexShares Morningstar Emerging | Avantis Emerging vs. First Trust Emerging |
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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