Correlation Between Xtrackers and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 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 SP 500 and Xtrackers MSCI World, you can compare the effects of market volatilities on Xtrackers 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 with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Xtrackers MSCI.
Diversification Opportunities for Xtrackers and Xtrackers MSCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Xtrackers is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 and Xtrackers MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers 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 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 World has no effect on the direction of Xtrackers i.e., Xtrackers and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Xtrackers and Xtrackers MSCI
Assuming the 90 days trading horizon Xtrackers SP 500 is expected to generate 1.37 times more return on investment than Xtrackers MSCI. However, Xtrackers is 1.37 times more volatile than Xtrackers MSCI World. It trades about 0.11 of its potential returns per unit of risk. Xtrackers MSCI World is currently generating about 0.06 per unit of risk. If you would invest 22,909 in Xtrackers SP 500 on August 24, 2024 and sell it today you would earn a total of 953.00 from holding Xtrackers SP 500 or generate 4.16% 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. Xtrackers MSCI World
Performance |
| Timeline |
| Xtrackers SP 500 |
| Xtrackers MSCI World |
Xtrackers and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and Xtrackers MSCI
The main advantage of trading using opposite Xtrackers and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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 vs. Xtrackers MSCI | Xtrackers vs. Xtrackers FTSE 250 | Xtrackers vs. Xtrackers Ie Plc | Xtrackers vs. Xtrackers Russell 2000 |
| Xtrackers MSCI vs. Leverage Shares 3x | Xtrackers MSCI vs. WisdomTree SP 500 | Xtrackers MSCI vs. WisdomTree Silver 3x | Xtrackers 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |