Correlation Between Xtrackers MSCI and EA Series

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

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

Diversification Opportunities for Xtrackers MSCI and EA Series

0.09

Correlation Coefficient

Xtrackers MSCI  EA Series

Significant diversification

The 3 months correlation between Xtrackers and MDLV is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Kokusai and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 Kokusai are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and EA Series go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and EA Series

Given the investment horizon of 90 days Xtrackers MSCI Kokusai is expected to generate 1.18 times more return on investment than EA Series. However, Xtrackers MSCI is 1.18 times more volatile than EA Series Trust. It trades about 0.04 of its potential returns per unit of risk. EA Series Trust is currently generating about -0.08 per unit of risk. If you would invest  10,091  in Xtrackers MSCI Kokusai on October 20, 2024 and sell it today you would earn a total of  179.00  from holding Xtrackers MSCI Kokusai or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Xtrackers MSCI Kokusai  vs.  EA Series Trust

Xtrackers MSCI Kokusai

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Kokusai are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Xtrackers MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

EA Series Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, EA Series 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 EA Series

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

The idea behind Xtrackers MSCI Kokusai and EA Series Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.