Correlation Between Xtrackers MSCI and Nine Energy

Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Nine Energy 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 Nine Energy 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 Nine Energy Service, you can compare the effects of market volatilities on Xtrackers MSCI and Nine Energy 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 Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Nine Energy.

Diversification Opportunities for Xtrackers MSCI and Nine Energy

0.04

Correlation Coefficient

Xtrackers MSCI  Nine Energy

Significant diversification

The 3 months correlation between Xtrackers and Nine is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI All and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service 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 Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Nine Energy go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Nine Energy

If you would invest  111.00  in Nine Energy Service on September 14, 2024 and sell it today you would earn a total of  3.00  from holding Nine Energy Service or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Xtrackers MSCI All  vs.  Nine Energy Service

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.

Nine Energy Service

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers MSCI and Nine Energy

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

The idea behind Xtrackers MSCI All and Nine Energy Service 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.