Correlation Between Xtrackers LevDAX and UNIVMUSIC GRPADR/050
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on Xtrackers LevDAX and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and UNIVMUSIC GRPADR/050.
Diversification Opportunities for Xtrackers LevDAX and UNIVMUSIC GRPADR/050
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and UNIVMUSIC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR/050 has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and UNIVMUSIC GRPADR/050 go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and UNIVMUSIC GRPADR/050
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.89 times more return on investment than UNIVMUSIC GRPADR/050. However, Xtrackers LevDAX is 1.13 times less risky than UNIVMUSIC GRPADR/050. It trades about 0.6 of its potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about 0.34 per unit of risk. If you would invest 20,015 in Xtrackers LevDAX on November 3, 2024 and sell it today you would earn a total of 3,475 from holding Xtrackers LevDAX or generate 17.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Xtrackers LevDAX vs. UNIVMUSIC GRPADR050
Performance |
| Timeline |
| Xtrackers LevDAX |
| UNIVMUSIC GRPADR/050 |
Xtrackers LevDAX and UNIVMUSIC GRPADR/050 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and UNIVMUSIC GRPADR/050
The main advantage of trading using opposite Xtrackers LevDAX and UNIVMUSIC GRPADR/050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 will offset losses from the drop in UNIVMUSIC GRPADR/050'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 |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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