Correlation Between Xtrackers LevDAX and BHP Group
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and BHP Group 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 BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and BHP Group Limited, you can compare the effects of market volatilities on Xtrackers LevDAX and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and BHP Group.
Diversification Opportunities for Xtrackers LevDAX and BHP Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and BHP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and BHP Group go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and BHP Group
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.96 times more return on investment than BHP Group. However, Xtrackers LevDAX is 1.04 times less risky than BHP Group. It trades about 0.05 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.0 per unit of risk. If you would invest 14,280 in Xtrackers LevDAX on August 31, 2024 and sell it today you would earn a total of 4,142 from holding Xtrackers LevDAX or generate 29.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. BHP Group Limited
Performance |
| Timeline |
| Xtrackers LevDAX |
| BHP Group Limited |
Xtrackers LevDAX and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and BHP Group
The main advantage of trading using opposite Xtrackers LevDAX and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group'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 |
| BHP Group vs. BHP Group Limited | BHP Group vs. Rio Tinto Group | BHP Group vs. Rio Tinto Group | BHP Group vs. Vale SA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |