Correlation Between Xtrackers LevDAX and MONEYSUPERMARKET
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and MONEYSUPERMARKET 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 MONEYSUPERMARKET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and MONEYSUPERMARKET, you can compare the effects of market volatilities on Xtrackers LevDAX and MONEYSUPERMARKET 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 MONEYSUPERMARKET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and MONEYSUPERMARKET.
Diversification Opportunities for Xtrackers LevDAX and MONEYSUPERMARKET
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtrackers and MONEYSUPERMARKET is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and MONEYSUPERMARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONEYSUPERMARKET 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 MONEYSUPERMARKET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONEYSUPERMARKET has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and MONEYSUPERMARKET go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and MONEYSUPERMARKET
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.71 times more return on investment than MONEYSUPERMARKET. However, Xtrackers LevDAX is 1.4 times less risky than MONEYSUPERMARKET. It trades about 0.34 of its potential returns per unit of risk. MONEYSUPERMARKET is currently generating about 0.24 per unit of risk. If you would invest 22,330 in Xtrackers LevDAX on November 22, 2024 and sell it today you would earn a total of 1,740 from holding Xtrackers LevDAX or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Xtrackers LevDAX vs. MONEYSUPERMARKET
Performance |
| Timeline |
| Xtrackers LevDAX |
Risk-Adjusted Performance
Solid
Weak | Strong |
| MONEYSUPERMARKET |
Xtrackers LevDAX and MONEYSUPERMARKET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and MONEYSUPERMARKET
The main advantage of trading using opposite Xtrackers LevDAX and MONEYSUPERMARKET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, MONEYSUPERMARKET 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 MONEYSUPERMARKET will offset losses from the drop in MONEYSUPERMARKET's long position.The idea behind Xtrackers LevDAX and MONEYSUPERMARKET pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MONEYSUPERMARKET vs. ASPEN TECHINC DL | MONEYSUPERMARKET vs. Gaztransport Technigaz SA | MONEYSUPERMARKET vs. Agilent Technologies | MONEYSUPERMARKET vs. DICKS Sporting Goods |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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