Correlation Between LG DAX and Amundi MSCI

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

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

Diversification Opportunities for LG DAX and Amundi MSCI

-0.56

Correlation Coefficient

LG DAX  Amundi MSCI

Excellent diversification

The 3 months correlation between DES2 and Amundi is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LG DAX Daily and Amundi MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi MSCI Europe and LG DAX 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 LG DAX Daily are associated (or correlated) with Amundi MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi MSCI Europe has no effect on the direction of LG DAX i.e., LG DAX and Amundi MSCI go up and down completely randomly.

Pair Corralation between LG DAX and Amundi MSCI

Assuming the 90 days trading horizon LG DAX Daily is expected to under-perform the Amundi MSCI. In addition to that, LG DAX is 1.5 times more volatile than Amundi MSCI Europe. It trades about -0.46 of its total potential returns per unit of risk. Amundi MSCI Europe is currently generating about 0.24 per unit of volatility. If you would invest  7,761  in Amundi MSCI Europe on October 22, 2024 and sell it today you would earn a total of  266.00  from holding Amundi MSCI Europe or generate 3.43% return on investment over 90 days.

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

LG DAX Daily  vs.  Amundi MSCI Europe

LG DAX Daily

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amundi MSCI Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi MSCI Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amundi MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LG DAX and Amundi MSCI

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

The idea behind LG DAX Daily and Amundi MSCI Europe 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.