Correlation Between Xtrackers MSCI and LS 1x
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and LS 1x 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 LS 1x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI and LS 1x Amazon, you can compare the effects of market volatilities on Xtrackers MSCI and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and LS 1x.
Diversification Opportunities for Xtrackers MSCI and LS 1x
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xtrackers and 1AMZ is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI and LS 1x Amazon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Amazon 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 are associated (or correlated) with LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Amazon has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and LS 1x go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and LS 1x
Assuming the 90 days trading horizon Xtrackers MSCI is expected to under-perform the LS 1x. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers MSCI is 1.82 times less risky than LS 1x. The etf trades about -0.24 of its potential returns per unit of risk. The LS 1x Amazon is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 581.00 in LS 1x Amazon on August 29, 2024 and sell it today you would earn a total of 51.00 from holding LS 1x Amazon or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI vs. LS 1x Amazon
Performance |
| Timeline |
| Xtrackers MSCI |
| LS 1x Amazon |
Xtrackers MSCI and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and LS 1x
The main advantage of trading using opposite Xtrackers MSCI and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| Xtrackers MSCI vs. Vanguard FTSE Developed | Xtrackers MSCI vs. Leverage Shares 2x | Xtrackers MSCI vs. Amundi Index Solutions | Xtrackers MSCI vs. Albion Venture Capital |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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