Correlation Between Xtrackers MSCI and Inspire Global

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Can any of the company-specific risk be diversified away by investing in both Xtrackers MSCI and Inspire 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 Inspire Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers MSCI Kokusai and Inspire Global Hope, you can compare the effects of market volatilities on Xtrackers MSCI and Inspire 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 Inspire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Inspire Global.

Diversification Opportunities for Xtrackers MSCI and Inspire Global

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Xtrackers and Inspire is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Kokusai and Inspire Global Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Global Hope 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 Kokusai are associated (or correlated) with Inspire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Global Hope has no effect on the direction of Xtrackers MSCI i.e., Xtrackers MSCI and Inspire Global go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Inspire Global

Given the investment horizon of 90 days Xtrackers MSCI Kokusai is expected to generate 0.88 times more return on investment than Inspire Global. However, Xtrackers MSCI Kokusai is 1.14 times less risky than Inspire Global. It trades about 0.1 of its potential returns per unit of risk. Inspire Global Hope is currently generating about 0.05 per unit of risk. If you would invest  11,182  in Xtrackers MSCI Kokusai on May 29, 2025 and sell it today you would earn a total of  161.00  from holding Xtrackers MSCI Kokusai or generate 1.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Xtrackers MSCI Kokusai  vs.  Inspire Global Hope

 Performance 
       Timeline  
Xtrackers MSCI Kokusai 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Kokusai are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in September 2025.
Inspire Global Hope 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Inspire Global Hope are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Inspire Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Xtrackers MSCI and Inspire Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers MSCI and Inspire Global

The main advantage of trading using opposite Xtrackers MSCI and Inspire Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI position performs unexpectedly, Inspire 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 Inspire Global will offset losses from the drop in Inspire Global's long position.
The idea behind Xtrackers MSCI Kokusai and Inspire Global Hope 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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