Correlation Between Xtrackers LevDAX and Allianz SE
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Allianz SE 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 Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Allianz SE, you can compare the effects of market volatilities on Xtrackers LevDAX and Allianz SE 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 Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Allianz SE.
Diversification Opportunities for Xtrackers LevDAX and Allianz SE
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Allianz is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Allianz SE go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Allianz SE
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to under-perform the Allianz SE. In addition to that, Xtrackers LevDAX is 1.97 times more volatile than Allianz SE. It trades about -0.01 of its total potential returns per unit of risk. Allianz SE is currently generating about 0.05 per unit of volatility. If you would invest 28,950 in Allianz SE on September 1, 2024 and sell it today you would earn a total of 250.00 from holding Allianz SE or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Allianz SE
Performance |
| Timeline |
| Xtrackers LevDAX |
| Allianz SE |
Xtrackers LevDAX and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Allianz SE
The main advantage of trading using opposite Xtrackers LevDAX and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE'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 |
| Allianz SE vs. United Breweries Co | Allianz SE vs. Hyster Yale Materials Handling | Allianz SE vs. Mitsubishi Materials | Allianz SE vs. Applied Materials |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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