Correlation Between Xtrackers California and X Square
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and X Square 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 California and X Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and X Square Series Trust, you can compare the effects of market volatilities on Xtrackers California and X Square 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 California with a short position of X Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and X Square.
Diversification Opportunities for Xtrackers California and X Square
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtrackers and ZTAX is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and X Square Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Square Series and Xtrackers California 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 California Municipal are associated (or correlated) with X Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Square Series has no effect on the direction of Xtrackers California i.e., Xtrackers California and X Square go up and down completely randomly.
Pair Corralation between Xtrackers California and X Square
Allowing for the 90-day total investment horizon Xtrackers California is expected to generate 2.0 times less return on investment than X Square. But when comparing it to its historical volatility, Xtrackers California Municipal is 6.0 times less risky than X Square. It trades about 0.19 of its potential returns per unit of risk. X Square Series Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,611 in X Square Series Trust on August 29, 2024 and sell it today you would earn a total of 59.00 from holding X Square Series Trust or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. X Square Series Trust
Performance |
| Timeline |
| Xtrackers California |
| X Square Series |
Xtrackers California and X Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and X Square
The main advantage of trading using opposite Xtrackers California and X Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, X Square 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 X Square will offset losses from the drop in X Square's long position.| Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. ALPS Intermediate Municipal | Xtrackers California vs. MYMF |
| X Square vs. SSGA Active Trust | X Square vs. SPDR Nuveen Municipal | X Square vs. iShares Short Maturity | X Square vs. First Trust Flexible |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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