Correlation Between Xtrackers MSCI and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and SPDR Dow 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 SPDR Dow 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 SPDR Dow Jones, you can compare the effects of market volatilities on Xtrackers MSCI and SPDR Dow 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 SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and SPDR Dow.
Diversification Opportunities for Xtrackers MSCI and SPDR Dow
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtrackers and SPDR is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI China and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and SPDR Dow go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and SPDR Dow
Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 3.31 times less return on investment than SPDR Dow. In addition to that, Xtrackers MSCI is 1.58 times more volatile than SPDR Dow Jones. It trades about 0.01 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.03 per unit of volatility. If you would invest 1,648 in SPDR Dow Jones on September 2, 2024 and sell it today you would earn a total of 184.00 from holding SPDR Dow Jones or generate 11.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.53% |
| Values | Daily Returns |
Xtrackers MSCI China vs. SPDR Dow Jones
Performance |
| Timeline |
| Xtrackers MSCI China |
| SPDR Dow Jones |
Xtrackers MSCI and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and SPDR Dow
The main advantage of trading using opposite Xtrackers MSCI and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |