Correlation Between Xtrackers MSCI and Vanguard Strategic
Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Vanguard Strategic 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 Vanguard Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI EAFE and Vanguard Strategic Small Cap, you can compare the effects of market volatilities on Xtrackers MSCI and Vanguard Strategic 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 Vanguard Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Vanguard Strategic.
Diversification Opportunities for Xtrackers MSCI and Vanguard Strategic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and Vanguard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI EAFE and Vanguard Strategic Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Strategic 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 EAFE are associated (or correlated) with Vanguard Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Strategic has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Vanguard Strategic go up and down completely randomly.
Pair Corralation between Xtrackers MSCI and Vanguard Strategic
Given the investment horizon of 90 days Xtrackers MSCI is expected to generate 2.56 times less return on investment than Vanguard Strategic. But when comparing it to its historical volatility, Xtrackers MSCI EAFE is 3.31 times less risky than Vanguard Strategic. It trades about 0.33 of its potential returns per unit of risk. Vanguard Strategic Small Cap is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,958 in Vanguard Strategic Small Cap on October 6, 2025 and sell it today you would earn a total of 312.00 from holding Vanguard Strategic Small Cap or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers MSCI EAFE vs. Vanguard Strategic Small Cap
Performance |
| Timeline |
| Xtrackers MSCI EAFE |
| Vanguard Strategic |
Xtrackers MSCI and Vanguard Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers MSCI and Vanguard Strategic
The main advantage of trading using opposite Xtrackers MSCI and Vanguard Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Vanguard Strategic 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 Vanguard Strategic will offset losses from the drop in Vanguard Strategic's long position.| Xtrackers MSCI vs. iShares ESG Aware | Xtrackers MSCI vs. iShares MSCI Mexico | Xtrackers MSCI vs. Franklin International Core | Xtrackers MSCI vs. WisdomTree Emerging Markets |
| Vanguard Strategic vs. Invesco FTSE RAFI | Vanguard Strategic vs. SPDR MSCI ACWI | Vanguard Strategic vs. Direxion Daily Small | Vanguard Strategic vs. SPDR SP Oil |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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