Correlation Between Xtrackers MSCI and DWS

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

Diversification Opportunities for Xtrackers MSCI and DWS

-0.18

Correlation Coefficient

Xtrackers MSCI  DWS

Good diversification

The 3 months correlation between Xtrackers and DWS is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and DWS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS 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 DWS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and DWS go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and DWS

If you would invest  2,536  in DWS on September 2, 2024 and sell it today you would earn a total of  0.00  from holding DWS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Xtrackers MSCI EAFE  vs.  DWS

Xtrackers MSCI EAFE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI EAFE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

DWS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DWS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, DWS is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xtrackers MSCI and DWS

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

The idea behind Xtrackers MSCI EAFE and DWS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.