Correlation Between Xtrackers MSCI and Matthews Emerging
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Matthews 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 Matthews 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 Matthews Emerging Markets, you can compare the effects of market volatilities on Xtrackers MSCI and Matthews 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 Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Matthews Emerging.
Diversification Opportunities for Xtrackers MSCI and Matthews Emerging
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Matthews is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging and Matthews Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews 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 Matthews Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Emerging Markets has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Matthews Emerging go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Matthews Emerging
Given the investment horizon of 90 days Xtrackers MSCI Emerging is expected to generate 0.88 times more return on investment than Matthews Emerging. However, Xtrackers MSCI Emerging is 1.14 times less risky than Matthews Emerging. It trades about 0.06 of its potential returns per unit of risk. Matthews Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest 2,260 in Xtrackers MSCI Emerging on September 3, 2024 and sell it today you would earn a total of 278.00 from holding Xtrackers MSCI Emerging or generate 12.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.81% |
| Values | Daily Returns |
Xtrackers MSCI Emerging vs. Matthews Emerging Markets
Performance |
| Timeline |
| Xtrackers MSCI Emerging |
| Matthews Emerging Markets |
Xtrackers MSCI and Matthews Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Matthews Emerging
The main advantage of trading using opposite Xtrackers MSCI and Matthews Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Matthews 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 Matthews Emerging will offset losses from the drop in Matthews 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 |
| Matthews Emerging vs. FT Vest Equity | Matthews Emerging vs. Northern Lights | Matthews Emerging vs. Dimensional International High | Matthews Emerging vs. JPMorgan Fundamental Data |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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