Correlation Between Xtrackers LevDAX and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and BORR DRILLING 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 BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and BORR DRILLING NEW, you can compare the effects of market volatilities on Xtrackers LevDAX and BORR DRILLING 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 BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and BORR DRILLING.
Diversification Opportunities for Xtrackers LevDAX and BORR DRILLING
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and BORR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and BORR DRILLING go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and BORR DRILLING
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.39 times more return on investment than BORR DRILLING. However, Xtrackers LevDAX is 2.53 times less risky than BORR DRILLING. It trades about -0.14 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.1 per unit of risk. If you would invest 19,468 in Xtrackers LevDAX on August 29, 2024 and sell it today you would lose (1,046) from holding Xtrackers LevDAX or give up 5.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. BORR DRILLING NEW
Performance |
| Timeline |
| Xtrackers LevDAX |
| BORR DRILLING NEW |
Xtrackers LevDAX and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and BORR DRILLING
The main advantage of trading using opposite Xtrackers LevDAX and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING'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 |
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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