Correlation Between Xtrackers ShortDAX and LOREAL ADR
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and LOREAL ADR 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 LOREAL ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and LOREAL ADR 15EO, you can compare the effects of market volatilities on Xtrackers ShortDAX and LOREAL ADR 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 LOREAL ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and LOREAL ADR.
Diversification Opportunities for Xtrackers ShortDAX and LOREAL ADR
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtrackers and LOREAL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and LOREAL ADR 15EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOREAL ADR 15EO 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 LOREAL ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOREAL ADR 15EO has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and LOREAL ADR go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and LOREAL ADR
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the LOREAL ADR. In addition to that, Xtrackers ShortDAX is 1.25 times more volatile than LOREAL ADR 15EO. It trades about -0.52 of its total potential returns per unit of risk. LOREAL ADR 15EO is currently generating about 0.27 per unit of volatility. If you would invest 6,550 in LOREAL ADR 15EO on November 1, 2024 and sell it today you would earn a total of 400.00 from holding LOREAL ADR 15EO or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. LOREAL ADR 15EO
Performance |
| Timeline |
| Xtrackers ShortDAX |
| LOREAL ADR 15EO |
Xtrackers ShortDAX and LOREAL ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and LOREAL ADR
The main advantage of trading using opposite Xtrackers ShortDAX and LOREAL ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, LOREAL ADR 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 LOREAL ADR will offset losses from the drop in LOREAL ADR'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 |
| LOREAL ADR vs. LOral SA | LOREAL ADR vs. Colgate Palmolive | LOREAL ADR vs. Superior Plus Corp | LOREAL ADR vs. Origin Agritech |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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