Correlation Between Xtrackers MSCI and Schwab International
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Schwab International 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 Schwab International 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 Schwab International Dividend, you can compare the effects of market volatilities on Xtrackers MSCI and Schwab International 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 Schwab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Schwab International.
Diversification Opportunities for Xtrackers MSCI and Schwab International
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Xtrackers and Schwab is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and Schwab International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab International 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 Schwab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Schwab International go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Schwab International
Given the investment horizon of 90 days Xtrackers MSCI is expected to generate 1.02 times less return on investment than Schwab International. In addition to that, Xtrackers MSCI is 1.17 times more volatile than Schwab International Dividend. It trades about 0.04 of its total potential returns per unit of risk. Schwab International Dividend is currently generating about 0.04 per unit of volatility. If you would invest 2,403 in Schwab International Dividend on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Schwab International Dividend or generate 0.42% 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. Schwab International Dividend
Performance |
| Timeline |
| Xtrackers MSCI EAFE |
| Schwab International |
Xtrackers MSCI and Schwab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Schwab International
The main advantage of trading using opposite Xtrackers MSCI and Schwab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Schwab International 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 Schwab International will offset losses from the drop in Schwab International's long position.| Xtrackers MSCI vs. Global X MSCI | Xtrackers MSCI vs. Global X Alternative | Xtrackers MSCI vs. First Trust Intl | Xtrackers MSCI vs. iShares AsiaPacific Dividend |
| Schwab International vs. Freedom Day Dividend | Schwab International vs. Franklin Templeton ETF | Schwab International vs. iShares MSCI China | Schwab International vs. Tidal Trust II |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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