Correlation Between Xtrackers MSCI and SP 500
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and SP 500 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 SP 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI and SP 500 VIX, you can compare the effects of market volatilities on Xtrackers MSCI and SP 500 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 SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and SP 500.
Diversification Opportunities for Xtrackers MSCI and SP 500
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Xtrackers and VILX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI and SP 500 VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 VIX 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 SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 VIX has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and SP 500 go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and SP 500
Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 0.12 times more return on investment than SP 500. However, Xtrackers MSCI is 8.0 times less risky than SP 500. It trades about 0.15 of its potential returns per unit of risk. SP 500 VIX is currently generating about -0.07 per unit of risk. If you would invest 4,642 in Xtrackers MSCI on November 4, 2024 and sell it today you would earn a total of 153.00 from holding Xtrackers MSCI or generate 3.3% 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. SP 500 VIX
Performance |
| Timeline |
| Xtrackers MSCI |
| SP 500 VIX |
Xtrackers MSCI and SP 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and SP 500
The main advantage of trading using opposite Xtrackers MSCI and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.| Xtrackers MSCI vs. Xtrackers FTSE 250 | Xtrackers MSCI vs. Xtrackers Ie Plc | Xtrackers MSCI vs. Xtrackers Russell 2000 | Xtrackers MSCI vs. Xtrackers USD Corporate |
| SP 500 vs. iShares MSCI Japan | SP 500 vs. Amundi EUR High | SP 500 vs. iShares JP Morgan | SP 500 vs. Xtrackers MSCI |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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