Correlation Between Xtrackers LevDAX and Melco Resorts
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Melco Resorts 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 Melco Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Melco Resorts Entertainment, you can compare the effects of market volatilities on Xtrackers LevDAX and Melco Resorts 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 Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Melco Resorts.
Diversification Opportunities for Xtrackers LevDAX and Melco Resorts
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xtrackers and Melco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert 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 Melco Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Melco Resorts go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Melco Resorts
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.48 times more return on investment than Melco Resorts. However, Xtrackers LevDAX is 2.1 times less risky than Melco Resorts. It trades about 0.08 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.03 per unit of risk. If you would invest 13,638 in Xtrackers LevDAX on November 9, 2024 and sell it today you would earn a total of 9,702 from holding Xtrackers LevDAX or generate 71.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Melco Resorts Entertainment
Performance |
| Timeline |
| Xtrackers LevDAX |
| Melco Resorts Entert |
Xtrackers LevDAX and Melco Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Melco Resorts
The main advantage of trading using opposite Xtrackers LevDAX and Melco Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Melco Resorts 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 Melco Resorts will offset losses from the drop in Melco Resorts' long position.| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
| Melco Resorts vs. Electronic Arts | Melco Resorts vs. Samsung Electronics Co | Melco Resorts vs. ARROW ELECTRONICS | Melco Resorts vs. ELECTRONIC ARTS |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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