Correlation Between Xtrackers MSCI and NuShares ETF
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and NuShares ETF 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 NuShares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI EAFE and NuShares ETF Trust, you can compare the effects of market volatilities on Xtrackers MSCI and NuShares ETF 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 NuShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and NuShares ETF.
Diversification Opportunities for Xtrackers MSCI and NuShares ETF
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Xtrackers and NuShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust 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 EAFE are associated (or correlated) with NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and NuShares ETF go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and NuShares ETF
Given the investment horizon of 90 days Xtrackers MSCI EAFE is expected to generate 1.02 times more return on investment than NuShares ETF. However, Xtrackers MSCI is 1.02 times more volatile than NuShares ETF Trust. It trades about 0.04 of its potential returns per unit of risk. NuShares ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 3,080 in Xtrackers MSCI EAFE on September 5, 2024 and sell it today you would earn a total of 23.00 from holding Xtrackers MSCI EAFE or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI EAFE vs. NuShares ETF Trust
Performance |
| Timeline |
| Xtrackers MSCI EAFE |
| NuShares ETF Trust |
Xtrackers MSCI and NuShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and NuShares ETF
The main advantage of trading using opposite Xtrackers MSCI and NuShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, NuShares ETF 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 NuShares ETF will offset losses from the drop in NuShares ETF's long position.| Xtrackers MSCI vs. iShares Core SP | Xtrackers MSCI vs. iShares Core 1 5 | Xtrackers MSCI vs. iShares Core MSCI | Xtrackers MSCI vs. iShares Core SP |
| NuShares ETF vs. iShares Core SP | NuShares ETF vs. iShares Core 1 5 | NuShares ETF vs. iShares Core MSCI | NuShares ETF vs. iShares Core SP |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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