Correlation Between Virtus WMC and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Virtus WMC 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 Virtus WMC and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus WMC International and Xtrackers MSCI EAFE, you can compare the effects of market volatilities on Virtus WMC 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 Virtus WMC with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus WMC and Xtrackers MSCI.
Diversification Opportunities for Virtus WMC and Xtrackers MSCI
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Virtus and Xtrackers is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Virtus WMC International 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 Virtus WMC 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 Virtus WMC International 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 Virtus WMC i.e., Virtus WMC and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Virtus WMC and Xtrackers MSCI
Given the investment horizon of 90 days Virtus WMC International is expected to generate 0.88 times more return on investment than Xtrackers MSCI. However, Virtus WMC International is 1.13 times less risky than Xtrackers MSCI. It trades about -0.14 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about -0.17 per unit of risk. If you would invest 2,787 in Virtus WMC International on August 24, 2024 and sell it today you would lose (67.00) from holding Virtus WMC International or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virtus WMC International vs. Xtrackers MSCI EAFE
Performance |
| Timeline |
| Virtus WMC International |
| Xtrackers MSCI EAFE |
Virtus WMC and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus WMC and Xtrackers MSCI
The main advantage of trading using opposite Virtus WMC and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus WMC 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.| Virtus WMC vs. Franklin Templeton ETF | Virtus WMC vs. Altrius Global Dividend | Virtus WMC vs. Invesco Exchange Traded | Virtus WMC vs. Franklin International Core |
| Xtrackers MSCI vs. Dimensional Targeted Value | Xtrackers MSCI vs. Dimensional Small Cap | Xtrackers MSCI vs. Dimensional Marketwide Value | Xtrackers MSCI vs. Dimensional Core Equity |
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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