Correlation Between Xtrackers FTSE and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers FTSE 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 Xtrackers FTSE and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers FTSE Developed and Xtrackers MSCI All, you can compare the effects of market volatilities on Xtrackers FTSE 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 Xtrackers FTSE with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers FTSE and Xtrackers MSCI.
Diversification Opportunities for Xtrackers FTSE and Xtrackers MSCI
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xtrackers and Xtrackers is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers FTSE Developed and Xtrackers MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI All and Xtrackers FTSE 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 FTSE Developed 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 All has no effect on the direction of Xtrackers FTSE i.e., Xtrackers FTSE and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Xtrackers FTSE and Xtrackers MSCI
Given the investment horizon of 90 days Xtrackers FTSE is expected to generate 1.17 times less return on investment than Xtrackers MSCI. In addition to that, Xtrackers FTSE is 1.23 times more volatile than Xtrackers MSCI All. It trades about 0.04 of its total potential returns per unit of risk. Xtrackers MSCI All is currently generating about 0.06 per unit of volatility. If you would invest 3,462 in Xtrackers MSCI All on September 12, 2024 and sell it today you would earn a total of 23.00 from holding Xtrackers MSCI All or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers FTSE Developed vs. Xtrackers MSCI All
Performance |
| Timeline |
| Xtrackers FTSE Developed |
| Xtrackers MSCI All |
Xtrackers FTSE and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers FTSE and Xtrackers MSCI
The main advantage of trading using opposite Xtrackers FTSE and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers FTSE 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.| Xtrackers FTSE vs. Xtrackers Russell Multifactor | Xtrackers FTSE vs. Xtrackers MSCI All | Xtrackers FTSE vs. WisdomTree Dynamic Currency | Xtrackers FTSE vs. Xtrackers MSCI Eurozone |
| Xtrackers MSCI vs. iShares MSCI Intl | Xtrackers MSCI vs. iShares MSCI Intl | Xtrackers MSCI vs. iShares Currency Hedged | Xtrackers MSCI vs. iShares Edge MSCI |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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