Correlation Between HANetf ICAV and Xtrackers MSCI

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

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

Diversification Opportunities for HANetf ICAV and Xtrackers MSCI

0.82

Correlation Coefficient

HANetf ICAV  Xtrackers MSCI

Very poor diversification

The 3 months correlation between HANetf and Xtrackers is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding HANetf ICAV and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI and HANetf ICAV 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 HANetf ICAV 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 has no effect on the direction of HANetf ICAV i.e., HANetf ICAV and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between HANetf ICAV and Xtrackers MSCI

Assuming the 90 days trading horizon HANetf ICAV is expected to generate 1.59 times more return on investment than Xtrackers MSCI. However, HANetf ICAV is 1.59 times more volatile than Xtrackers MSCI. It trades about 0.07 of its potential returns per unit of risk. Xtrackers MSCI is currently generating about 0.04 per unit of risk. If you would invest  868.00  in HANetf ICAV on October 4, 2024 and sell it today you would earn a total of  544.00  from holding HANetf ICAV or generate 62.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.6%
Values	Daily Returns

HANetf ICAV   vs.  Xtrackers MSCI

HANetf ICAV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, HANetf ICAV reported solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers MSCI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HANetf ICAV and Xtrackers MSCI

The main advantage of trading using opposite HANetf ICAV and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANetf ICAV 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 HANetf ICAV and Xtrackers MSCI 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.