Correlation Between Xtrackers MSCI and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and SPDR 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 Xtrackers MSCI and SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI USA and SPDR MSCI Emerging, you can compare the effects of market volatilities on Xtrackers MSCI and SPDR 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 Xtrackers MSCI with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and SPDR MSCI.
Diversification Opportunities for Xtrackers MSCI and SPDR MSCI
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xtrackers and SPDR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI USA and SPDR MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI Emerging 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 USA are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI Emerging has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and SPDR MSCI go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and SPDR MSCI
Given the investment horizon of 90 days Xtrackers MSCI USA is expected to generate 0.8 times more return on investment than SPDR MSCI. However, Xtrackers MSCI USA is 1.25 times less risky than SPDR MSCI. It trades about 0.32 of its potential returns per unit of risk. SPDR MSCI Emerging is currently generating about -0.13 per unit of risk. If you would invest 5,297 in Xtrackers MSCI USA on September 5, 2024 and sell it today you would earn a total of 304.00 from holding Xtrackers MSCI USA or generate 5.74% 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 USA vs. SPDR MSCI Emerging
Performance |
| Timeline |
| Xtrackers MSCI USA |
| SPDR MSCI Emerging |
Xtrackers MSCI and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and SPDR MSCI
The main advantage of trading using opposite Xtrackers MSCI and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, SPDR 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| Xtrackers MSCI vs. Vanguard Total Stock | Xtrackers MSCI vs. SPDR SP 500 | Xtrackers MSCI vs. iShares Core SP | Xtrackers MSCI vs. Vanguard Dividend Appreciation |
| SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR MSCI EAFE | SPDR MSCI vs. SPDR DoubleLine Emerging | SPDR MSCI vs. SPDR MSCI EAFE |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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