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 Pakistan and Vanguard FTSE All World, 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
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Pakistan and Vanguard FTSE All World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE All 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 Pakistan 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 All 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 Pakistan is expected to generate 2.69 times more return on investment than Vanguard FTSE. However, Xtrackers MSCI is 2.69 times more volatile than Vanguard FTSE All World. It trades about 0.28 of its potential returns per unit of risk. Vanguard FTSE All World is currently generating about 0.15 per unit of risk. If you would invest 90.00 in Xtrackers MSCI Pakistan on September 25, 2024 and sell it today you would earn a total of 36.00 from holding Xtrackers MSCI Pakistan or generate 40.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.46% |
Values | Daily Returns |
Xtrackers MSCI Pakistan vs. Vanguard FTSE All World
Performance |
Timeline |
Xtrackers MSCI Pakistan |
Vanguard FTSE All |
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. UBS Fund Solutions | Xtrackers MSCI vs. Xtrackers II | Xtrackers MSCI vs. Xtrackers Nikkei 225 | Xtrackers MSCI vs. iShares VII PLC |
Vanguard FTSE vs. UBS Fund Solutions | Vanguard FTSE vs. Xtrackers II | Vanguard FTSE vs. Xtrackers Nikkei 225 | Vanguard FTSE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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