Correlation Between Xtrackers LevDAX and CN MODERN
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and CN MODERN 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 LevDAX and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and CN MODERN DAIRY, you can compare the effects of market volatilities on Xtrackers LevDAX and CN MODERN 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 LevDAX with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and CN MODERN.
Diversification Opportunities for Xtrackers LevDAX and CN MODERN
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and 07M is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and Xtrackers LevDAX 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 LevDAX are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and CN MODERN go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and CN MODERN
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.67 times more return on investment than CN MODERN. However, Xtrackers LevDAX is 1.5 times less risky than CN MODERN. It trades about 0.05 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.01 per unit of risk. If you would invest 14,280 in Xtrackers LevDAX on August 31, 2024 and sell it today you would earn a total of 4,142 from holding Xtrackers LevDAX or generate 29.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Xtrackers LevDAX vs. CN MODERN DAIRY
Performance |
| Timeline |
| Xtrackers LevDAX |
| CN MODERN DAIRY |
Xtrackers LevDAX and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and CN MODERN
The main advantage of trading using opposite Xtrackers LevDAX and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
| CN MODERN vs. SIVERS SEMICONDUCTORS AB | CN MODERN vs. Darden Restaurants | CN MODERN vs. Reliance Steel Aluminum | CN MODERN vs. Q2M Managementberatung 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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