Correlation Between Xtrackers LevDAX and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Neste Oyj 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 Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Neste Oyj, you can compare the effects of market volatilities on Xtrackers LevDAX and Neste Oyj 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 Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Neste Oyj.
Diversification Opportunities for Xtrackers LevDAX and Neste Oyj
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Neste is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj 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 Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Neste Oyj go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Neste Oyj
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.55 times more return on investment than Neste Oyj. However, Xtrackers LevDAX is 1.83 times less risky than Neste Oyj. It trades about 0.08 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.11 per unit of risk. If you would invest 14,162 in Xtrackers LevDAX on August 25, 2024 and sell it today you would earn a total of 4,260 from holding Xtrackers LevDAX or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Neste Oyj
Performance |
| Timeline |
| Xtrackers LevDAX |
| Neste Oyj |
Xtrackers LevDAX and Neste Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Neste Oyj
The main advantage of trading using opposite Xtrackers LevDAX and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Neste Oyj 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 Neste Oyj will offset losses from the drop in Neste Oyj'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 |
| Neste Oyj vs. Charter Communications | Neste Oyj vs. ANTA SPORTS PRODUCT | Neste Oyj vs. Playtech plc | Neste Oyj vs. PLAY2CHILL SA ZY |
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 Stocks Directory module to find actively traded stocks across global markets.
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