Correlation Between SPDR Portfolio and Xtrackers MSCI

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

By analyzing existing cross correlation between SPDR Portfolio Emerging and Xtrackers MSCI Emerging, you can compare the effects of market volatilities on SPDR Portfolio 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 SPDR Portfolio with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Xtrackers MSCI.

Diversification Opportunities for SPDR Portfolio and Xtrackers MSCI

0.99

Correlation Coefficient

SPDR Portfolio  Xtrackers MSCI

No risk reduction

The 3 months correlation between SPDR and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Emerging and Xtrackers MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Emerging and SPDR Portfolio 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 SPDR Portfolio Emerging 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 Emerging has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Xtrackers MSCI

Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.13 times less return on investment than Xtrackers MSCI. In addition to that, SPDR Portfolio is 1.04 times more volatile than Xtrackers MSCI Emerging. It trades about 0.06 of its total potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about 0.07 per unit of volatility. If you would invest  2,456  in Xtrackers MSCI Emerging on September 3, 2024 and sell it today you would earn a total of  104.25  from holding Xtrackers MSCI Emerging or generate 4.24% return on investment over 90 days.

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

SPDR Portfolio Emerging  vs.  Xtrackers MSCI Emerging

SPDR Portfolio Emerging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio Emerging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Xtrackers MSCI Emerging

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Emerging are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Xtrackers MSCI is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR Portfolio and Xtrackers MSCI

The main advantage of trading using opposite SPDR Portfolio and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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.

The idea behind SPDR Portfolio Emerging and Xtrackers MSCI Emerging 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.