Correlation Between Xtrackers ShortDAX and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and LVMH Mot 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 LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and LVMH Mot Hennessy, you can compare the effects of market volatilities on Xtrackers ShortDAX and LVMH Mot 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 LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and LVMH Mot.
Diversification Opportunities for Xtrackers ShortDAX and LVMH Mot
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and LVMH is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Mot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and LVMH Mot go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and LVMH Mot
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the LVMH Mot. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.36 times less risky than LVMH Mot. The etf trades about -0.06 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 15,700 in LVMH Mot Hennessy on October 28, 2024 and sell it today you would lose (1,000.00) from holding LVMH Mot Hennessy or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Xtrackers ShortDAX |
| LVMH Mot Hennessy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Xtrackers ShortDAX and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and LVMH Mot
The main advantage of trading using opposite Xtrackers ShortDAX and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, LVMH Mot 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 LVMH Mot will offset losses from the drop in LVMH Mot'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 |
| LVMH Mot vs. Maple Leaf Foods | LVMH Mot vs. CITY OFFICE REIT | LVMH Mot vs. High Liner Foods | LVMH Mot vs. alstria office REIT AG |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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