Correlation Between Xtrackers LevDAX and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Fast Retailing Co, you can compare the effects of market volatilities on Xtrackers LevDAX and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Fast Retailing.
Diversification Opportunities for Xtrackers LevDAX and Fast Retailing
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Fast is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Fast Retailing go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Fast Retailing
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.04 times less return on investment than Fast Retailing. In addition to that, Xtrackers LevDAX is 1.16 times more volatile than Fast Retailing Co. It trades about 0.06 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.08 per unit of volatility. If you would invest 19,500 in Fast Retailing Co on August 30, 2024 and sell it today you would earn a total of 12,160 from holding Fast Retailing Co or generate 62.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Fast Retailing Co
Performance |
| Timeline |
| Xtrackers LevDAX |
| Fast Retailing |
Xtrackers LevDAX and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Fast Retailing
The main advantage of trading using opposite Xtrackers LevDAX and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing'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 |
| Fast Retailing vs. Flutter Entertainment PLC | Fast Retailing vs. Nufarm Limited | Fast Retailing vs. TOWNSQUARE MEDIA INC | Fast Retailing vs. GigaMedia |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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