Correlation Between Xtrackers MSCI and UBS ETF
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and UBS ETF 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 UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI China and UBS ETF MSCI, you can compare the effects of market volatilities on Xtrackers MSCI and UBS ETF 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 UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and UBS ETF.
Diversification Opportunities for Xtrackers MSCI and UBS ETF
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and UBS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI China and UBS ETF MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF MSCI 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 China are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF MSCI has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and UBS ETF go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and UBS ETF
Assuming the 90 days trading horizon Xtrackers MSCI China is expected to generate 3.25 times more return on investment than UBS ETF. However, Xtrackers MSCI is 3.25 times more volatile than UBS ETF MSCI. It trades about 0.04 of its potential returns per unit of risk. UBS ETF MSCI is currently generating about -0.1 per unit of risk. If you would invest 1,369 in Xtrackers MSCI China on September 2, 2024 and sell it today you would earn a total of 18.00 from holding Xtrackers MSCI China or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers MSCI China vs. UBS ETF MSCI
Performance |
| Timeline |
| Xtrackers MSCI China |
| UBS ETF MSCI |
Xtrackers MSCI and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and UBS ETF
The main advantage of trading using opposite Xtrackers MSCI and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.| Xtrackers MSCI vs. Xtrackers MSCI USA | Xtrackers MSCI vs. Xtrackers USD Corporate | Xtrackers MSCI vs. Xtrackers MSCI AC | Xtrackers MSCI vs. Xtrackers MSCI World |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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