Correlation Between Xtrackers LevDAX and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Ebro Foods 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 Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Ebro Foods SA, you can compare the effects of market volatilities on Xtrackers LevDAX and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Ebro Foods.
Diversification Opportunities for Xtrackers LevDAX and Ebro Foods
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Ebro is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Ebro Foods SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods SA 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods SA has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Ebro Foods go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Ebro Foods
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.59 times more return on investment than Ebro Foods. However, Xtrackers LevDAX is 1.59 times more volatile than Ebro Foods SA. It trades about 0.05 of its potential returns per unit of risk. Ebro Foods SA is currently generating about 0.02 per unit of risk. If you would invest 13,422 in Xtrackers LevDAX on August 27, 2024 and sell it today you would earn a total of 5,000 from holding Xtrackers LevDAX or generate 37.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Ebro Foods SA
Performance |
| Timeline |
| Xtrackers LevDAX |
| Ebro Foods SA |
Xtrackers LevDAX and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Ebro Foods
The main advantage of trading using opposite Xtrackers LevDAX and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
| Ebro Foods vs. Tower Semiconductor | Ebro Foods vs. YOOMA WELLNESS INC | Ebro Foods vs. Bumrungrad Hospital Public | Ebro Foods vs. TOREX SEMICONDUCTOR LTD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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