Correlation Between Xtrackers ShortDAX and LENNAR CORP
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and LENNAR CORP 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 ShortDAX and LENNAR CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and LENNAR P B, you can compare the effects of market volatilities on Xtrackers ShortDAX and LENNAR CORP 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 ShortDAX with a short position of LENNAR CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and LENNAR CORP.
Diversification Opportunities for Xtrackers ShortDAX and LENNAR CORP
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and LENNAR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and LENNAR P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENNAR CORP and Xtrackers ShortDAX 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 ShortDAX are associated (or correlated) with LENNAR CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENNAR CORP has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and LENNAR CORP go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and LENNAR CORP
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 0.69 times more return on investment than LENNAR CORP. However, Xtrackers ShortDAX is 1.45 times less risky than LENNAR CORP. It trades about 0.15 of its potential returns per unit of risk. LENNAR P B is currently generating about 0.02 per unit of risk. If you would invest 83.00 in Xtrackers ShortDAX on August 25, 2024 and sell it today you would earn a total of 4.00 from holding Xtrackers ShortDAX or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. LENNAR P B
Performance |
| Timeline |
| Xtrackers ShortDAX |
| LENNAR CORP |
Xtrackers ShortDAX and LENNAR CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and LENNAR CORP
The main advantage of trading using opposite Xtrackers ShortDAX and LENNAR CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, LENNAR CORP 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 LENNAR CORP will offset losses from the drop in LENNAR CORP's long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
| LENNAR CORP vs. Lennar | LENNAR CORP vs. NVR Inc | LENNAR CORP vs. PulteGroup | LENNAR CORP vs. Sekisui Chemical Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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