Correlation Between First Trust and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Intl and Xtrackers MSCI EAFE, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Xtrackers MSCI.
Diversification Opportunities for First Trust and Xtrackers MSCI
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Xtrackers is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Intl and Xtrackers MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EAFE and First Trust 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 First Trust Intl 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 EAFE has no effect on the direction of First Trust i.e., First Trust and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between First Trust and Xtrackers MSCI
Considering the 90-day investment horizon First Trust is expected to generate 3.9 times less return on investment than Xtrackers MSCI. In addition to that, First Trust is 1.02 times more volatile than Xtrackers MSCI EAFE. It trades about 0.06 of its total potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about 0.24 per unit of volatility. If you would invest 2,397 in Xtrackers MSCI EAFE on October 20, 2024 and sell it today you would earn a total of 67.00 from holding Xtrackers MSCI EAFE or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Intl vs. Xtrackers MSCI EAFE
Performance |
| Timeline |
| First Trust Intl |
| Xtrackers MSCI EAFE |
First Trust and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Xtrackers MSCI
The main advantage of trading using opposite First Trust and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Global X MSCI | First Trust vs. Fidelity International High | First Trust vs. WBI Power Factor | First Trust vs. First Trust RBA |
| Xtrackers MSCI vs. iShares MSCI EAFE | Xtrackers MSCI vs. Schwab Fundamental International | Xtrackers MSCI vs. Vanguard International High | Xtrackers MSCI vs. iShares International Select |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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