Correlation Between Xtrackers LevDAX and China Construction
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and China Construction 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 China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and China Construction Bank, you can compare the effects of market volatilities on Xtrackers LevDAX and China Construction 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 China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and China Construction.
Diversification Opportunities for Xtrackers LevDAX and China Construction
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and China is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank 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 China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and China Construction go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and China Construction
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.63 times more return on investment than China Construction. However, Xtrackers LevDAX is 1.58 times less risky than China Construction. It trades about -0.01 of its potential returns per unit of risk. China Construction Bank is currently generating about -0.01 per unit of risk. If you would invest 18,532 in Xtrackers LevDAX on September 1, 2024 and sell it today you would lose (110.00) from holding Xtrackers LevDAX or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers LevDAX vs. China Construction Bank
Performance |
| Timeline |
| Xtrackers LevDAX |
| China Construction Bank |
Xtrackers LevDAX and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and China Construction
The main advantage of trading using opposite Xtrackers LevDAX and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction'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 |
| China Construction vs. OURGAME INTHOLDL 00005 | China Construction vs. Penn National Gaming | China Construction vs. Marie Brizard Wine | China Construction vs. Media and Games |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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