Correlation Between Xtrackers LevDAX and FF South
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and FF South 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 South 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 South, you can compare the effects of market volatilities on Xtrackers LevDAX and FF South 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 South. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and FF South.
Diversification Opportunities for Xtrackers LevDAX and FF South
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and IPGS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and FF South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF South 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 South. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF South has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and FF South go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and FF South
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.23 times more return on investment than FF South. However, Xtrackers LevDAX is 1.23 times more volatile than FF South. It trades about 0.06 of its potential returns per unit of risk. FF South is currently generating about 0.05 per unit of risk. If you would invest 11,810 in Xtrackers LevDAX on August 30, 2024 and sell it today you would earn a total of 6,612 from holding Xtrackers LevDAX or generate 55.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 39.17% |
| Values | Daily Returns |
Xtrackers LevDAX vs. FF South
Performance |
| Timeline |
| Xtrackers LevDAX |
| FF South |
Xtrackers LevDAX and FF South Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and FF South
The main advantage of trading using opposite Xtrackers LevDAX and FF South positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, FF South 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 South will offset losses from the drop in FF South'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 South vs. Renaissance Europe C | FF South vs. Superior Plus Corp | FF South vs. Origin Agritech | FF South vs. Identiv |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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