Correlation Between FT Cboe and Xtrackers MSCI

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

By analyzing existing cross correlation between FT Cboe Vest and Xtrackers MSCI Japan, you can compare the effects of market volatilities on FT Cboe and Xtrackers 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 FT Cboe with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Xtrackers MSCI.

Diversification Opportunities for FT Cboe and Xtrackers MSCI

-0.44

Correlation Coefficient

FT Cboe  Xtrackers MSCI

Very good diversification

The 3 months correlation between IGLD and Xtrackers is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Xtrackers MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Japan and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Japan has no effect on the direction of FT Cboe i.e., FT Cboe and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between FT Cboe and Xtrackers MSCI

Given the investment horizon of 90 days FT Cboe Vest is expected to under-perform the Xtrackers MSCI. But the etf apears to be less risky and, when comparing its historical volatility, FT Cboe Vest is 1.15 times less risky than Xtrackers MSCI. The etf trades about -0.02 of its potential returns per unit of risk. The Xtrackers MSCI Japan is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,140  in Xtrackers MSCI Japan on October 24, 2024 and sell it today you would earn a total of  263.00  from holding Xtrackers MSCI Japan or generate 3.68% return on investment over 90 days.

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

FT Cboe Vest  vs.  Xtrackers MSCI Japan

FT Cboe Vest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FT Cboe Vest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, FT Cboe is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Xtrackers MSCI Japan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Japan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking indicators, Xtrackers MSCI is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FT Cboe and Xtrackers MSCI

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

The idea behind FT Cboe Vest and Xtrackers MSCI Japan 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.