Correlation Between LG DAX and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both LG DAX 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 LG DAX and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG DAX Daily and Xtrackers MSCI, you can compare the effects of market volatilities on LG DAX 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 LG DAX with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG DAX and Xtrackers MSCI.
Diversification Opportunities for LG DAX and Xtrackers MSCI
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DES2 and Xtrackers is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding LG DAX Daily and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI and LG DAX 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 LG DAX Daily 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 has no effect on the direction of LG DAX i.e., LG DAX and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between LG DAX and Xtrackers MSCI
Assuming the 90 days trading horizon LG DAX Daily is expected to under-perform the Xtrackers MSCI. In addition to that, LG DAX is 1.89 times more volatile than Xtrackers MSCI. It trades about -0.13 of its total potential returns per unit of risk. Xtrackers MSCI is currently generating about 0.17 per unit of volatility. If you would invest 3,247 in Xtrackers MSCI on September 25, 2024 and sell it today you would earn a total of 75.00 from holding Xtrackers MSCI or generate 2.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 85.71% |
Values | Daily Returns |
LG DAX Daily vs. Xtrackers MSCI
Performance |
Timeline |
LG DAX Daily |
Xtrackers MSCI |
LG DAX and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG DAX and Xtrackers MSCI
The main advantage of trading using opposite LG DAX and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG DAX 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.LG DAX vs. UBS Fund Solutions | LG DAX vs. Xtrackers II | LG DAX vs. Xtrackers Nikkei 225 | LG DAX vs. iShares VII PLC |
Xtrackers MSCI vs. UBS Fund Solutions | Xtrackers MSCI vs. Xtrackers II | Xtrackers MSCI vs. Xtrackers Nikkei 225 | Xtrackers MSCI vs. iShares VII PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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