Correlation Between Xtrackers LevDAX and FF Australia
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and FF Australia 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 FF Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and FF Australia, you can compare the effects of market volatilities on Xtrackers LevDAX and FF Australia 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 FF Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and FF Australia.
Diversification Opportunities for Xtrackers LevDAX and FF Australia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and FPGK is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and FF Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF Australia 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 FF Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF Australia has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and FF Australia go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and FF Australia
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.35 times more return on investment than FF Australia. However, Xtrackers LevDAX is 1.35 times more volatile than FF Australia. It trades about 0.06 of its potential returns per unit of risk. FF Australia is currently generating about 0.07 per unit of risk. If you would invest 12,028 in Xtrackers LevDAX on September 3, 2024 and sell it today you would earn a total of 6,394 from holding Xtrackers LevDAX or generate 53.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.08% |
| Values | Daily Returns |
Xtrackers LevDAX vs. FF Australia
Performance |
| Timeline |
| Xtrackers LevDAX |
| FF Australia |
Xtrackers LevDAX and FF Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and FF Australia
The main advantage of trading using opposite Xtrackers LevDAX and FF Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, FF Australia 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 FF Australia will offset losses from the drop in FF Australia'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 |
| FF Australia vs. Groupama Entreprises N | FF Australia vs. Renaissance Europe C | FF Australia vs. Superior Plus Corp | FF Australia vs. Origin Agritech |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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