Correlation Between Xtrackers MSCI and Aberdeen New

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

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

Diversification Opportunities for Xtrackers MSCI and Aberdeen New

0.16

Correlation Coefficient

Xtrackers MSCI  Aberdeen New

Average diversification

The 3 months correlation between Xtrackers and Aberdeen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI and Aberdeen New India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen New India 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 are associated (or correlated) with Aberdeen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen New India has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Aberdeen New go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Aberdeen New

Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 1.51 times more return on investment than Aberdeen New. However, Xtrackers MSCI is 1.51 times more volatile than Aberdeen New India. It trades about 0.07 of its potential returns per unit of risk. Aberdeen New India is currently generating about 0.02 per unit of risk. If you would invest  4,544  in Xtrackers MSCI on September 13, 2024 and sell it today you would earn a total of  259.00  from holding Xtrackers MSCI or generate 5.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Xtrackers MSCI  vs.  Aberdeen New India

Xtrackers MSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aberdeen New India

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen New India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aberdeen New is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xtrackers MSCI and Aberdeen New

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

The idea behind Xtrackers MSCI and Aberdeen New India 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.