Correlation Between Xtrackers MSCI and Xtrackers Switzerland
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Xtrackers Switzerland 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 Xtrackers Switzerland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI AC and Xtrackers Switzerland UCITS, you can compare the effects of market volatilities on Xtrackers MSCI and Xtrackers Switzerland 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 Xtrackers Switzerland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Xtrackers Switzerland.
Diversification Opportunities for Xtrackers MSCI and Xtrackers Switzerland
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and Xtrackers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI AC and Xtrackers Switzerland UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Switzerland 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 AC are associated (or correlated) with Xtrackers Switzerland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Switzerland has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Xtrackers Switzerland go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Xtrackers Switzerland
Assuming the 90 days trading horizon Xtrackers MSCI AC is expected to under-perform the Xtrackers Switzerland. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers MSCI AC is 1.25 times less risky than Xtrackers Switzerland. The etf trades about -0.36 of its potential returns per unit of risk. The Xtrackers Switzerland UCITS is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 11,988 in Xtrackers Switzerland UCITS on October 8, 2024 and sell it today you would lose (136.00) from holding Xtrackers Switzerland UCITS or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.33% |
| Values | Daily Returns |
Xtrackers MSCI AC vs. Xtrackers Switzerland UCITS
Performance |
| Timeline |
| Xtrackers MSCI AC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xtrackers Switzerland |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Xtrackers MSCI and Xtrackers Switzerland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Xtrackers Switzerland
The main advantage of trading using opposite Xtrackers MSCI and Xtrackers Switzerland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Xtrackers Switzerland 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 Switzerland will offset losses from the drop in Xtrackers Switzerland's long position.The idea behind Xtrackers MSCI AC and Xtrackers Switzerland UCITS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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