Correlation Between Xtrackers LevDAX and Smiths Group
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Smiths Group 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 Smiths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Smiths Group plc, you can compare the effects of market volatilities on Xtrackers LevDAX and Smiths Group 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 Smiths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Smiths Group.
Diversification Opportunities for Xtrackers LevDAX and Smiths Group
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Smiths is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Smiths Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smiths Group plc 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 Smiths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smiths Group plc has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Smiths Group go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Smiths Group
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to under-perform the Smiths Group. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers LevDAX is 1.63 times less risky than Smiths Group. The etf trades about -0.13 of its potential returns per unit of risk. The Smiths Group plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,883 in Smiths Group plc on August 30, 2024 and sell it today you would earn a total of 159.00 from holding Smiths Group plc or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Smiths Group plc
Performance |
| Timeline |
| Xtrackers LevDAX |
| Smiths Group plc |
Xtrackers LevDAX and Smiths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Smiths Group
The main advantage of trading using opposite Xtrackers LevDAX and Smiths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Smiths Group 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 Smiths Group will offset losses from the drop in Smiths Group'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 |
| Smiths Group vs. Apple Inc | Smiths Group vs. Apple Inc | Smiths Group vs. Apple Inc | Smiths Group vs. Apple Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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