Correlation Between Xtrackers MSCI and WBI Power

Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and WBI Power 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 WBI Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtrackers MSCI EAFE and WBI Power Factor, you can compare the effects of market volatilities on Xtrackers MSCI and WBI Power 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 WBI Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and WBI Power.

Diversification Opportunities for Xtrackers MSCI and WBI Power

-0.58

Correlation Coefficient

Xtrackers MSCI  WBI Power

Excellent diversification

The 3 months correlation between Xtrackers and WBI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and WBI Power Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WBI Power Factor 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 EAFE are associated (or correlated) with WBI Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WBI Power Factor has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and WBI Power go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and WBI Power

Given the investment horizon of 90 days Xtrackers MSCI EAFE is expected to under-perform the WBI Power. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers MSCI EAFE is 1.12 times less risky than WBI Power. The etf trades about -0.12 of its potential returns per unit of risk. The WBI Power Factor is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,065  in WBI Power Factor on September 15, 2024 and sell it today you would earn a total of  54.00  from holding WBI Power Factor or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xtrackers MSCI EAFE  vs.  WBI Power Factor

Xtrackers MSCI EAFE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI EAFE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

WBI Power Factor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WBI Power Factor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, WBI Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xtrackers MSCI and WBI Power

The main advantage of trading using opposite Xtrackers MSCI and WBI Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, WBI Power 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 WBI Power will offset losses from the drop in WBI Power's long position.

The idea behind Xtrackers MSCI EAFE and WBI Power Factor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.