Correlation Between Amundi MSCI and LG DAX

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Can any of the company-specific risk be diversified away by investing in both Amundi MSCI and LG DAX 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 Amundi MSCI and LG DAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amundi MSCI Europe and LG DAX Daily, you can compare the effects of market volatilities on Amundi MSCI and LG DAX 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 Amundi MSCI with a short position of LG DAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi MSCI and LG DAX.

Diversification Opportunities for Amundi MSCI and LG DAX

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amundi and DES2 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Amundi MSCI Europe and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily and Amundi 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 Amundi MSCI Europe are associated (or correlated) with LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of Amundi MSCI i.e., Amundi MSCI and LG DAX go up and down completely randomly.

Pair Corralation between Amundi MSCI and LG DAX

Assuming the 90 days trading horizon Amundi MSCI Europe is expected to under-perform the LG DAX. But the etf apears to be less risky and, when comparing its historical volatility, Amundi MSCI Europe is 1.68 times less risky than LG DAX. The etf trades about -0.13 of its potential returns per unit of risk. The LG DAX Daily is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  97.00  in LG DAX Daily on August 28, 2024 and sell it today you would earn a total of  3.00  from holding LG DAX Daily or generate 3.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amundi MSCI Europe  vs.  LG DAX Daily

 Performance 
       Timeline  
Amundi MSCI Europe 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Amundi MSCI Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amundi MSCI is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
LG DAX Daily 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LG DAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LG DAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amundi MSCI and LG DAX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amundi MSCI and LG DAX

The main advantage of trading using opposite Amundi MSCI and LG DAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi MSCI position performs unexpectedly, LG DAX 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 LG DAX will offset losses from the drop in LG DAX's long position.
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The idea behind Amundi MSCI Europe and LG DAX Daily pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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