Correlation Between Xtrackers LevDAX and G8 EDUCATION
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and G8 EDUCATION 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 G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and G8 EDUCATION, you can compare the effects of market volatilities on Xtrackers LevDAX and G8 EDUCATION 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 G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and G8 EDUCATION.
Diversification Opportunities for Xtrackers LevDAX and G8 EDUCATION
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and 3EAG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION 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 G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and G8 EDUCATION go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and G8 EDUCATION
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.77 times less return on investment than G8 EDUCATION. But when comparing it to its historical volatility, Xtrackers LevDAX is 1.37 times less risky than G8 EDUCATION. It trades about 0.07 of its potential returns per unit of risk. G8 EDUCATION is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 54.00 in G8 EDUCATION on August 29, 2024 and sell it today you would earn a total of 28.00 from holding G8 EDUCATION or generate 51.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Xtrackers LevDAX vs. G8 EDUCATION
Performance |
| Timeline |
| Xtrackers LevDAX |
| G8 EDUCATION |
Xtrackers LevDAX and G8 EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and G8 EDUCATION
The main advantage of trading using opposite Xtrackers LevDAX and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION'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 |
| G8 EDUCATION vs. EAT WELL INVESTMENT | G8 EDUCATION vs. SLR Investment Corp | G8 EDUCATION vs. SEI INVESTMENTS | G8 EDUCATION vs. New Residential Investment |
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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