Correlation Between Xtrackers MSCI and GraniteShares

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

By analyzing existing cross correlation between Xtrackers MSCI World and GraniteShares 1x Short, you can compare the effects of market volatilities on Xtrackers MSCI and GraniteShares 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 GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and GraniteShares.

Diversification Opportunities for Xtrackers MSCI and GraniteShares

-0.81

Correlation Coefficient

Xtrackers MSCI  GraniteShares

Pay attention - limited upside

The 3 months correlation between Xtrackers and GraniteShares is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI World and GraniteShares 1x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 1x Short 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 World are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 1x Short has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and GraniteShares go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and GraniteShares

Assuming the 90 days trading horizon Xtrackers MSCI World is expected to generate 0.85 times more return on investment than GraniteShares. However, Xtrackers MSCI World is 1.17 times less risky than GraniteShares. It trades about 0.15 of its potential returns per unit of risk. GraniteShares 1x Short is currently generating about -0.25 per unit of risk. If you would invest  8,752  in Xtrackers MSCI World on September 12, 2024 and sell it today you would earn a total of  898.00  from holding Xtrackers MSCI World or generate 10.26% return on investment over 90 days.

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

Xtrackers MSCI World  vs.  GraniteShares 1x Short

Xtrackers MSCI World

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI World are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GraniteShares 1x Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GraniteShares 1x Short 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Xtrackers MSCI and GraniteShares

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

The idea behind Xtrackers MSCI World and GraniteShares 1x Short 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.