Correlation Between Xtrackers LevDAX and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Hang Seng 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 Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Hang Seng Bank, you can compare the effects of market volatilities on Xtrackers LevDAX and Hang Seng 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 Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Hang Seng.
Diversification Opportunities for Xtrackers LevDAX and Hang Seng
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Hang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng 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 Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Hang Seng go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Hang Seng
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 2.84 times less return on investment than Hang Seng. But when comparing it to its historical volatility, Xtrackers LevDAX is 1.8 times less risky than Hang Seng. It trades about 0.05 of its potential returns per unit of risk. Hang Seng Bank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 549.00 in Hang Seng Bank on September 1, 2024 and sell it today you would earn a total of 581.00 from holding Hang Seng Bank or generate 105.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Hang Seng Bank
Performance |
| Timeline |
| Xtrackers LevDAX |
| Hang Seng Bank |
Xtrackers LevDAX and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Hang Seng
The main advantage of trading using opposite Xtrackers LevDAX and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng'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 |
| Hang Seng vs. British American Tobacco | Hang Seng vs. International Game Technology | Hang Seng vs. HEALTHCARE REAL A | Hang Seng vs. DiamondRock Hospitality |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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