Correlation Between Xtrackers MSCI and Amundi CAC

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

By analyzing existing cross correlation between Xtrackers MSCI Europe and Amundi CAC 40, you can compare the effects of market volatilities on Xtrackers MSCI and Amundi CAC 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 Amundi CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Amundi CAC.

Diversification Opportunities for Xtrackers MSCI and Amundi CAC

0.0

Correlation Coefficient

Xtrackers MSCI  Amundi CAC

Pay attention - limited upside

The 3 months correlation between Xtrackers and Amundi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Europe and Amundi CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi CAC 40 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 Europe are associated (or correlated) with Amundi CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi CAC 40 has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Amundi CAC go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Amundi CAC

If you would invest  7,199  in Amundi CAC 40 on December 28, 2024 and sell it today you would earn a total of  591.00  from holding Amundi CAC 40 or generate 8.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Xtrackers MSCI Europe  vs.  Amundi CAC 40

Xtrackers MSCI Europe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers MSCI Europe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amundi CAC 40

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi CAC 40 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Amundi CAC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xtrackers MSCI and Amundi CAC

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

The idea behind Xtrackers MSCI Europe and Amundi CAC 40 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.