Correlation Between Xtrackers MSCI and WisdomTree NASDAQ
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and WisdomTree NASDAQ 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 WisdomTree NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI World and WisdomTree NASDAQ 100, you can compare the effects of market volatilities on Xtrackers MSCI and WisdomTree NASDAQ 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 WisdomTree NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and WisdomTree NASDAQ.
Diversification Opportunities for Xtrackers MSCI and WisdomTree NASDAQ
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and WisdomTree is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI World and WisdomTree NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree NASDAQ 100 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 World are associated (or correlated) with WisdomTree NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree NASDAQ 100 has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and WisdomTree NASDAQ go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and WisdomTree NASDAQ
Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 5.91 times less return on investment than WisdomTree NASDAQ. But when comparing it to its historical volatility, Xtrackers MSCI World is 2.67 times less risky than WisdomTree NASDAQ. It trades about 0.04 of its potential returns per unit of risk. WisdomTree NASDAQ 100 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,736 in WisdomTree NASDAQ 100 on August 28, 2024 and sell it today you would earn a total of 1,127 from holding WisdomTree NASDAQ 100 or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI World vs. WisdomTree NASDAQ 100
Performance |
| Timeline |
| Xtrackers MSCI World |
| WisdomTree NASDAQ 100 |
Xtrackers MSCI and WisdomTree NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and WisdomTree NASDAQ
The main advantage of trading using opposite Xtrackers MSCI and WisdomTree NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, WisdomTree NASDAQ 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 WisdomTree NASDAQ will offset losses from the drop in WisdomTree NASDAQ's long position.| Xtrackers MSCI vs. Xtrackers MSCI | Xtrackers MSCI vs. Xtrackers FTSE 250 | Xtrackers MSCI vs. Xtrackers Ie Plc | Xtrackers MSCI vs. Xtrackers Russell 2000 |
| WisdomTree NASDAQ vs. WisdomTree SP 500 | WisdomTree NASDAQ vs. WisdomTree Silver 3x | WisdomTree NASDAQ vs. Lyxor 10Y Inflation | WisdomTree NASDAQ vs. GraniteShares 3x Long |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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