Correlation Between Xtrackers LevDAX and International Business
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and International Business Machines, you can compare the effects of market volatilities on Xtrackers LevDAX and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and International Business.
Diversification Opportunities for Xtrackers LevDAX and International Business
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and International is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and International Business go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and International Business
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.53 times less return on investment than International Business. In addition to that, Xtrackers LevDAX is 1.31 times more volatile than International Business Machines. It trades about 0.09 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.19 per unit of volatility. If you would invest 15,900 in International Business Machines on September 19, 2024 and sell it today you would earn a total of 5,890 from holding International Business Machines or generate 37.04% 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. International Business Machine
Performance |
| Timeline |
| Xtrackers LevDAX |
| International Business |
Xtrackers LevDAX and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and International Business
The main advantage of trading using opposite Xtrackers LevDAX and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
| International Business vs. Ramsay Health Care | International Business vs. Carnegie Clean Energy | International Business vs. NAKED WINES PLC | International Business vs. Sabra Health Care |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |