Correlation Between Xtrackers Russell and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers Russell and Xtrackers MSCI 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 Russell and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Russell 2000 and Xtrackers MSCI USA, you can compare the effects of market volatilities on Xtrackers Russell and Xtrackers MSCI 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 Russell with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Russell and Xtrackers MSCI.
Diversification Opportunities for Xtrackers Russell and Xtrackers MSCI
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Xtrackers is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Russell 2000 and Xtrackers MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI USA and Xtrackers Russell 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 Russell 2000 are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI USA has no effect on the direction of Xtrackers Russell i.e., Xtrackers Russell and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Xtrackers Russell and Xtrackers MSCI
Assuming the 90 days trading horizon Xtrackers Russell 2000 is expected to generate 1.56 times more return on investment than Xtrackers MSCI. However, Xtrackers Russell is 1.56 times more volatile than Xtrackers MSCI USA. It trades about 0.29 of its potential returns per unit of risk. Xtrackers MSCI USA is currently generating about 0.26 per unit of risk. If you would invest 2,516,800 in Xtrackers Russell 2000 on September 3, 2024 and sell it today you would earn a total of 291,500 from holding Xtrackers Russell 2000 or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Russell 2000 vs. Xtrackers MSCI USA
Performance |
| Timeline |
| Xtrackers Russell 2000 |
| Xtrackers MSCI USA |
Xtrackers Russell and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Russell and Xtrackers MSCI
The main advantage of trading using opposite Xtrackers Russell and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Russell position performs unexpectedly, Xtrackers MSCI 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 MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Xtrackers Russell vs. Leverage Shares 3x | Xtrackers Russell vs. WisdomTree Natural Gas | Xtrackers Russell vs. Leverage Shares 3x | Xtrackers Russell vs. GraniteShares 3x Short |
| Xtrackers MSCI vs. Xtrackers MSCI | Xtrackers MSCI vs. Xtrackers FTSE 250 | Xtrackers MSCI vs. Xtrackers Ie Plc | Xtrackers MSCI vs. Xtrackers Russell 2000 |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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