Correlation Between Xtrackers MSCI and IQ Candriam

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

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

Diversification Opportunities for Xtrackers MSCI and IQ Candriam

0.95

Correlation Coefficient

Xtrackers MSCI  IQ Candriam

Almost no diversification

The 3 months correlation between Xtrackers and IQSI is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and IQ Candriam ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Candriam ESG 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 EAFE are associated (or correlated) with IQ Candriam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Candriam ESG has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and IQ Candriam go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and IQ Candriam

Given the investment horizon of 90 days Xtrackers MSCI is expected to generate 1.13 times less return on investment than IQ Candriam. But when comparing it to its historical volatility, Xtrackers MSCI EAFE is 1.15 times less risky than IQ Candriam. It trades about 0.2 of its potential returns per unit of risk. IQ Candriam ESG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,846  in IQ Candriam ESG on December 20, 2024 and sell it today you would earn a total of  289.00  from holding IQ Candriam ESG or generate 10.15% return on investment over 90 days.

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

Xtrackers MSCI EAFE  vs.  IQ Candriam ESG

Xtrackers MSCI EAFE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI EAFE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

IQ Candriam ESG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Candriam ESG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, IQ Candriam may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xtrackers MSCI and IQ Candriam

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

The idea behind Xtrackers MSCI EAFE and IQ Candriam ESG 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.