Correlation Between Xtrackers and Lyxor MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers and Lyxor 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 and Lyxor MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers SP 500 and Lyxor MSCI World, you can compare the effects of market volatilities on Xtrackers and Lyxor 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 with a short position of Lyxor MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Lyxor MSCI.
Diversification Opportunities for Xtrackers and Lyxor MSCI
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Lyxor is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 and Lyxor MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI World and Xtrackers 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 SP 500 are associated (or correlated) with Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI World has no effect on the direction of Xtrackers i.e., Xtrackers and Lyxor MSCI go up and down completely randomly.
Pair Corralation between Xtrackers and Lyxor MSCI
Assuming the 90 days trading horizon Xtrackers SP 500 is expected to generate 1.39 times more return on investment than Lyxor MSCI. However, Xtrackers is 1.39 times more volatile than Lyxor MSCI World. It trades about 0.14 of its potential returns per unit of risk. Lyxor MSCI World is currently generating about 0.04 per unit of risk. If you would invest 23,098 in Xtrackers SP 500 on August 27, 2024 and sell it today you would earn a total of 1,178 from holding Xtrackers SP 500 or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers SP 500 vs. Lyxor MSCI World
Performance |
| Timeline |
| Xtrackers SP 500 |
| Lyxor MSCI World |
Xtrackers and Lyxor MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and Lyxor MSCI
The main advantage of trading using opposite Xtrackers and Lyxor MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, Lyxor 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 Lyxor MSCI will offset losses from the drop in Lyxor MSCI's long position.| Xtrackers vs. WisdomTree SP 500 | Xtrackers vs. WisdomTree Silver 3x | Xtrackers vs. Lyxor 10Y Inflation | Xtrackers vs. GraniteShares 3x Long |
| Lyxor MSCI vs. Leverage Shares 3x | Lyxor MSCI vs. WisdomTree SP 500 | Lyxor MSCI vs. WisdomTree Silver 3x | Lyxor MSCI vs. Leverage Shares 3x |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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