Correlation Between Xtrackers LevDAX and Food Life
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Food Life 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 Food Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Food Life Companies, you can compare the effects of market volatilities on Xtrackers LevDAX and Food Life 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 Food Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Food Life.
Diversification Opportunities for Xtrackers LevDAX and Food Life
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Food is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Food Life Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Life Companies 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 Food Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Life Companies has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Food Life go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Food Life
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.63 times more return on investment than Food Life. However, Xtrackers LevDAX is 1.59 times less risky than Food Life. It trades about 0.12 of its potential returns per unit of risk. Food Life Companies is currently generating about 0.05 per unit of risk. If you would invest 11,884 in Xtrackers LevDAX on August 25, 2024 and sell it today you would earn a total of 6,538 from holding Xtrackers LevDAX or generate 55.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Food Life Companies
Performance |
| Timeline |
| Xtrackers LevDAX |
| Food Life Companies |
Xtrackers LevDAX and Food Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Food Life
The main advantage of trading using opposite Xtrackers LevDAX and Food Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Food Life 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 Food Life will offset losses from the drop in Food Life'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 |
| Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings | Food Life vs. Origin Agritech | Food Life vs. SIVERS SEMICONDUCTORS AB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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