Correlation Between AXS 2X and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both AXS 2X and IShares 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 AXS 2X and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXS 2X Innovation and iShares MSCI EAFE, you can compare the effects of market volatilities on AXS 2X and IShares 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 AXS 2X with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 2X and IShares MSCI.

Diversification Opportunities for AXS 2X and IShares MSCI

-0.4

Correlation Coefficient

AXS 2X  IShares MSCI

Very good diversification

The 3 months correlation between AXS and IShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding AXS 2X Innovation and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE and AXS 2X 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 AXS 2X Innovation are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of AXS 2X i.e., AXS 2X and IShares MSCI go up and down completely randomly.

Pair Corralation between AXS 2X and IShares MSCI

Given the investment horizon of 90 days AXS 2X Innovation is expected to under-perform the IShares MSCI. In addition to that, AXS 2X is 6.63 times more volatile than iShares MSCI EAFE. It trades about -0.06 of its total potential returns per unit of risk. iShares MSCI EAFE is currently generating about 0.13 per unit of volatility. If you would invest  6,085  in iShares MSCI EAFE on December 28, 2024 and sell it today you would earn a total of  405.00  from holding iShares MSCI EAFE or generate 6.66% return on investment over 90 days.

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

AXS 2X Innovation  vs.  iShares MSCI EAFE

AXS 2X Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXS 2X Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

iShares MSCI EAFE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI EAFE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AXS 2X and IShares MSCI

The main advantage of trading using opposite AXS 2X and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 2X position performs unexpectedly, IShares 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind AXS 2X Innovation and iShares MSCI EAFE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.