Correlation Between Cardano and Xtrackers MSCI

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

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

Diversification Opportunities for Cardano and Xtrackers MSCI

-0.12

Correlation Coefficient

Cardano  Xtrackers MSCI

Good diversification

The 3 months correlation between Cardano and Xtrackers is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Xtrackers MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI World and Cardano 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 Cardano 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 World has no effect on the direction of Cardano i.e., Cardano and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Cardano and Xtrackers MSCI

Assuming the 90 days trading horizon Cardano is expected to under-perform the Xtrackers MSCI. In addition to that, Cardano is 8.87 times more volatile than Xtrackers MSCI World. It trades about -0.02 of its total potential returns per unit of risk. Xtrackers MSCI World is currently generating about -0.01 per unit of volatility. If you would invest  7,054  in Xtrackers MSCI World on December 22, 2024 and sell it today you would lose (54.00) from holding Xtrackers MSCI World or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Cardano  vs.  Xtrackers MSCI World

Cardano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Cardano shareholders.

Xtrackers MSCI World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers MSCI World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cardano and Xtrackers MSCI

The main advantage of trading using opposite Cardano and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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 Cardano and Xtrackers MSCI World 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.