Correlation Between Xtrackers MSCI and HANetf ICAV

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

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

Diversification Opportunities for Xtrackers MSCI and HANetf ICAV

0.72

Correlation Coefficient

Xtrackers MSCI  HANetf ICAV

Poor diversification

The 3 months correlation between Xtrackers and HANetf is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV 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 are associated (or correlated) with HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and HANetf ICAV go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and HANetf ICAV

Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 1.02 times more return on investment than HANetf ICAV. However, Xtrackers MSCI is 1.02 times more volatile than HANetf ICAV . It trades about -0.11 of its potential returns per unit of risk. HANetf ICAV is currently generating about -0.22 per unit of risk. If you would invest  3,348  in Xtrackers MSCI on October 13, 2024 and sell it today you would lose (55.00) from holding Xtrackers MSCI or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Xtrackers MSCI  vs.  HANetf ICAV

Xtrackers MSCI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

HANetf ICAV

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HANetf ICAV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers MSCI and HANetf ICAV

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

The idea behind Xtrackers MSCI and HANetf ICAV 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.