Correlation Between Xtrackers MSCI and Strategy Shares

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

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

Diversification Opportunities for Xtrackers MSCI and Strategy Shares

0.06

Correlation Coefficient

Xtrackers MSCI  Strategy Shares

Significant diversification

The 3 months correlation between Xtrackers and Strategy is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares 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 Emerging are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Strategy Shares go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Strategy Shares

Given the investment horizon of 90 days Xtrackers MSCI Emerging is expected to under-perform the Strategy Shares. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers MSCI Emerging is 299.91 times less risky than Strategy Shares. The etf trades about -0.24 of its potential returns per unit of risk. The Strategy Shares is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Strategy Shares on October 8, 2024 and sell it today you would earn a total of  2,460  from holding Strategy Shares or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.42%
Values	Daily Returns

Xtrackers MSCI Emerging  vs.  Strategy Shares

Xtrackers MSCI Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Strategy Shares

Risk-Adjusted Performance

21 of 100

Solid

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

Pair Trading with Xtrackers MSCI and Strategy Shares

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

The idea behind Xtrackers MSCI Emerging and Strategy Shares 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.