Correlation Between Xtrackers MSCI and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Vanguard FTSE 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 Vanguard FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI USA and Vanguard FTSE Developed, you can compare the effects of market volatilities on Xtrackers MSCI and Vanguard FTSE 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 Vanguard FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Vanguard FTSE.
Diversification Opportunities for Xtrackers MSCI and Vanguard FTSE
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and Vanguard is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI USA and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 USA are associated (or correlated) with Vanguard FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Vanguard FTSE go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Vanguard FTSE
Assuming the 90 days trading horizon Xtrackers MSCI USA is expected to generate 1.38 times more return on investment than Vanguard FTSE. However, Xtrackers MSCI is 1.38 times more volatile than Vanguard FTSE Developed. It trades about 0.11 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.05 per unit of risk. If you would invest 465,825 in Xtrackers MSCI USA on September 2, 2024 and sell it today you would earn a total of 424,525 from holding Xtrackers MSCI USA or generate 91.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Xtrackers MSCI USA vs. Vanguard FTSE Developed
Performance |
| Timeline |
| Xtrackers MSCI USA |
| Vanguard FTSE Developed |
Xtrackers MSCI and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Vanguard FTSE
The main advantage of trading using opposite Xtrackers MSCI and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Vanguard FTSE 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 Vanguard FTSE will offset losses from the drop in Vanguard FTSE's long position.| Xtrackers MSCI vs. Vanguard FTSE Developed | Xtrackers MSCI vs. Leverage Shares 2x | Xtrackers MSCI vs. Amundi Index Solutions | Xtrackers MSCI vs. Amundi Index Solutions |
| Vanguard FTSE vs. Leverage Shares 2x | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Amundi Index Solutions | Vanguard FTSE vs. Albion Venture Capital |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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