Correlation Between Xtrackers MSCI and Rize Global

Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Rize Global 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 Rize Global 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 Rize Global Sustainable, you can compare the effects of market volatilities on Xtrackers MSCI and Rize Global 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 Rize Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Rize Global.

Diversification Opportunities for Xtrackers MSCI and Rize Global

0.98

Correlation Coefficient

Xtrackers MSCI  Rize Global

Almost no diversification

The 3 months correlation between Xtrackers and Rize is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI World and Rize Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rize Global Sustainable 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 Rize Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rize Global Sustainable has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Rize Global go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Rize Global

Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 1.04 times less return on investment than Rize Global. In addition to that, Xtrackers MSCI is 1.08 times more volatile than Rize Global Sustainable. It trades about 0.24 of its total potential returns per unit of risk. Rize Global Sustainable is currently generating about 0.27 per unit of volatility. If you would invest  506.00  in Rize Global Sustainable on April 22, 2025 and sell it today you would earn a total of  51.00  from holding Rize Global Sustainable or generate 10.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Xtrackers MSCI World  vs.  Rize Global Sustainable

Xtrackers MSCI World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI World are ranked lower than 19 (%) 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 August 2025.

Rize Global Sustainable

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rize Global Sustainable are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Rize Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Xtrackers MSCI and Rize Global

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

The idea behind Xtrackers MSCI World and Rize Global Sustainable 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.