Correlation Between Xtrackers LevDAX and Industrial
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Industrial 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 Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Industrial and Commercial, you can compare the effects of market volatilities on Xtrackers LevDAX and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Industrial.
Diversification Opportunities for Xtrackers LevDAX and Industrial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Industrial is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Industrial go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Industrial
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to under-perform the Industrial. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers LevDAX is 1.68 times less risky than Industrial. The etf trades about -0.07 of its potential returns per unit of risk. The Industrial and Commercial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 56.00 in Industrial and Commercial on August 31, 2024 and sell it today you would lose (1.00) from holding Industrial and Commercial or give up 1.79% 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. Industrial and Commercial
Performance |
| Timeline |
| Xtrackers LevDAX |
| Industrial and Commercial |
Xtrackers LevDAX and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Industrial
The main advantage of trading using opposite Xtrackers LevDAX and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial'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 |
| Industrial vs. INDCOMMBK CHINA ADR20 | Industrial vs. CHINA BANK ADR20 | Industrial vs. AGRICULTBK HADR25 YC | Industrial vs. COMMONWBK AUSTRSPADRS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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