Correlation Between Xtrackers LevDAX and Fanhua
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Fanhua 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 Fanhua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Fanhua Inc, you can compare the effects of market volatilities on Xtrackers LevDAX and Fanhua 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 Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Fanhua.
Diversification Opportunities for Xtrackers LevDAX and Fanhua
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Fanhua is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc 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 Fanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanhua Inc has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Fanhua go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Fanhua
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.19 times more return on investment than Fanhua. However, Xtrackers LevDAX is 5.2 times less risky than Fanhua. It trades about -0.09 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.38 per unit of risk. If you would invest 20,910 in Xtrackers LevDAX on October 11, 2024 and sell it today you would lose (415.00) from holding Xtrackers LevDAX or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Fanhua Inc
Performance |
| Timeline |
| Xtrackers LevDAX |
| Fanhua Inc |
Xtrackers LevDAX and Fanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Fanhua
The main advantage of trading using opposite Xtrackers LevDAX and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Fanhua 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 Fanhua will offset losses from the drop in Fanhua'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 |
| Fanhua vs. Q2M Managementberatung AG | Fanhua vs. CeoTronics AG | Fanhua vs. Ares Management Corp | Fanhua vs. VITEC SOFTWARE GROUP |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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