Correlation Between Xtrackers LevDAX and Keyence
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Keyence 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 Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Keyence, you can compare the effects of market volatilities on Xtrackers LevDAX and Keyence 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 Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Keyence.
Diversification Opportunities for Xtrackers LevDAX and Keyence
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Keyence is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence 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 Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Keyence go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Keyence
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 16.68 times less return on investment than Keyence. But when comparing it to its historical volatility, Xtrackers LevDAX is 3.55 times less risky than Keyence. It trades about 0.02 of its potential returns per unit of risk. Keyence is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 26,167 in Keyence on September 3, 2024 and sell it today you would earn a total of 14,363 from holding Keyence or generate 54.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Keyence
Performance |
| Timeline |
| Xtrackers LevDAX |
| Keyence |
Xtrackers LevDAX and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Keyence
The main advantage of trading using opposite Xtrackers LevDAX and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence'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 |
| Keyence vs. HEXAGON AB ADR1 | Keyence vs. Teledyne Technologies Incorporated | Keyence vs. Trimble | Keyence vs. MKS Instruments |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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