Correlation Between Xtrackers MSCI and SPDR BOFA
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and SPDR BOFA 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 SPDR BOFA 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 SPDR BOFA MERRILL, you can compare the effects of market volatilities on Xtrackers MSCI and SPDR BOFA 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 SPDR BOFA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and SPDR BOFA.
Diversification Opportunities for Xtrackers MSCI and SPDR BOFA
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xtrackers and SPDR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging and SPDR BOFA MERRILL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR BOFA MERRILL 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 SPDR BOFA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR BOFA MERRILL has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and SPDR BOFA go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and SPDR BOFA
Given the investment horizon of 90 days Xtrackers MSCI Emerging is expected to generate 0.88 times more return on investment than SPDR BOFA. However, Xtrackers MSCI Emerging is 1.13 times less risky than SPDR BOFA. It trades about 0.31 of its potential returns per unit of risk. SPDR BOFA MERRILL is currently generating about 0.19 per unit of risk. If you would invest 2,643 in Xtrackers MSCI Emerging on November 18, 2024 and sell it today you would earn a total of 191.00 from holding Xtrackers MSCI Emerging or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI Emerging vs. SPDR BOFA MERRILL
Performance |
| Timeline |
| Xtrackers MSCI Emerging |
| SPDR BOFA MERRILL |
Xtrackers MSCI and SPDR BOFA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and SPDR BOFA
The main advantage of trading using opposite Xtrackers MSCI and SPDR BOFA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, SPDR BOFA 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 SPDR BOFA will offset losses from the drop in SPDR BOFA's long position.| Xtrackers MSCI vs. Cambria Micro And | Xtrackers MSCI vs. Invesco Actively Managed | Xtrackers MSCI vs. Harbor ETF Trust | Xtrackers MSCI vs. iShares Trust |
| SPDR BOFA vs. Cambria Micro And | SPDR BOFA vs. Invesco Actively Managed | SPDR BOFA vs. Harbor ETF Trust | SPDR BOFA vs. iShares Trust |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |