Correlation Between Amundi EUR and Xtrackers MSCI

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

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

Diversification Opportunities for Amundi EUR and Xtrackers MSCI

0.89

Correlation Coefficient

Amundi EUR  Xtrackers MSCI

Very poor diversification

The 3 months correlation between Amundi and Xtrackers is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amundi EUR High and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI and Amundi EUR 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 Amundi EUR High 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 Amundi EUR i.e., Amundi EUR and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Amundi EUR and Xtrackers MSCI

Assuming the 90 days trading horizon Amundi EUR is expected to generate 24.6 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, Amundi EUR High is 6.97 times less risky than Xtrackers MSCI. It trades about 0.03 of its potential returns per unit of risk. Xtrackers MSCI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,770  in Xtrackers MSCI on December 13, 2024 and sell it today you would earn a total of  371.00  from holding Xtrackers MSCI or generate 7.78% return on investment over 90 days.

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

Amundi EUR High  vs.  Xtrackers MSCI

Amundi EUR High

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi EUR High are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi EUR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Xtrackers MSCI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 8 (%) 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 April 2025.

Pair Trading with Amundi EUR and Xtrackers MSCI

The main advantage of trading using opposite Amundi EUR and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi EUR 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 Amundi EUR High 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..