Correlation Between Xtrackers MSCI and China Yuchai

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

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

Diversification Opportunities for Xtrackers MSCI and China Yuchai

0.46

Correlation Coefficient

Xtrackers MSCI  China Yuchai

Very weak diversification

The 3 months correlation between Xtrackers and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI All and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna 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 All are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and China Yuchai go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and China Yuchai

If you would invest  2,807  in Xtrackers MSCI All on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Xtrackers MSCI All or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Xtrackers MSCI All  vs.  China Yuchai International

Xtrackers MSCI All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI All has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

China Yuchai Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Yuchai International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Xtrackers MSCI and China Yuchai

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

The idea behind Xtrackers MSCI All and China Yuchai International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.