Correlation Between DBGR and First Trust
Can any of the company-specific risk be diversified away by investing in both DBGR and First Trust 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 DBGR and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBGR and First Trust Germany, you can compare the effects of market volatilities on DBGR and First Trust 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 DBGR with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBGR and First Trust.
Diversification Opportunities for DBGR and First Trust
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between DBGR and First is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding DBGR and First Trust Germany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Germany and DBGR 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 DBGR are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Germany has no effect on the direction of DBGR i.e., DBGR and First Trust go up and down completely randomly.
Pair Corralation between DBGR and First Trust
If you would invest 3,090 in DBGR on August 29, 2024 and sell it today you would earn a total of 0.00 from holding DBGR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
DBGR vs. First Trust Germany
Performance |
| Timeline |
| DBGR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Germany |
DBGR and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBGR and First Trust
The main advantage of trading using opposite DBGR and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBGR position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.The idea behind DBGR and First Trust Germany 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.| First Trust vs. First Trust Switzerland | First Trust vs. First Trust United | First Trust vs. First Trust Japan | First Trust vs. First Trust Latin |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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