Correlation Between US Treasury and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 20 and Xtrackers MSCI Kokusai, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Xtrackers MSCI.
Diversification Opportunities for US Treasury and Xtrackers MSCI
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UTWY and Xtrackers is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 20 and Xtrackers MSCI Kokusai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Kokusai and US Treasury 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 US Treasury 20 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 Kokusai has no effect on the direction of US Treasury i.e., US Treasury and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between US Treasury and Xtrackers MSCI
Given the investment horizon of 90 days US Treasury is expected to generate 3.75 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, US Treasury 20 is 1.12 times less risky than Xtrackers MSCI. It trades about 0.03 of its potential returns per unit of risk. Xtrackers MSCI Kokusai is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9,315 in Xtrackers MSCI Kokusai on August 24, 2024 and sell it today you would earn a total of 930.00 from holding Xtrackers MSCI Kokusai or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 20 vs. Xtrackers MSCI Kokusai
Performance |
| Timeline |
| US Treasury 20 |
| Xtrackers MSCI Kokusai |
US Treasury and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and Xtrackers MSCI
The main advantage of trading using opposite US Treasury and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. Quadratic Interest Rate | US Treasury vs. AGFiQ Market Neutral | US Treasury vs. Simplify Interest Rate | US Treasury vs. Invesco Investment Grade |
| Xtrackers MSCI vs. Rbb Fund | Xtrackers MSCI vs. Ab Tax Aware Short | Xtrackers MSCI vs. US Treasury 20 | Xtrackers MSCI vs. EA Series 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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