Correlation Between Lumia and Xtrackers MSCI

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

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

Diversification Opportunities for Lumia and Xtrackers MSCI

0.61

Correlation Coefficient

Lumia  Xtrackers MSCI

Poor diversification

The 3 months correlation between Lumia and Xtrackers is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Xtrackers MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI USA and Lumia 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 Lumia 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 USA has no effect on the direction of Lumia i.e., Lumia and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Lumia and Xtrackers MSCI

Assuming the 90 days trading horizon Lumia is expected to under-perform the Xtrackers MSCI. In addition to that, Lumia is 4.43 times more volatile than Xtrackers MSCI USA. It trades about -0.2 of its total potential returns per unit of risk. Xtrackers MSCI USA is currently generating about -0.15 per unit of volatility. If you would invest  931,588  in Xtrackers MSCI USA on December 24, 2024 and sell it today you would lose (140,238) from holding Xtrackers MSCI USA or give up 15.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Lumia  vs.  Xtrackers MSCI USA

Lumia

Risk-Adjusted Performance

Very Weak

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

Xtrackers MSCI USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Lumia and Xtrackers MSCI

The main advantage of trading using opposite Lumia and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia 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 Lumia and Xtrackers MSCI USA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.