Correlation Between Xtrackers LevDAX and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and SMA Solar Technology, you can compare the effects of market volatilities on Xtrackers LevDAX and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and SMA Solar.
Diversification Opportunities for Xtrackers LevDAX and SMA Solar
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and SMA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and SMA Solar go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and SMA Solar
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.32 times more return on investment than SMA Solar. However, Xtrackers LevDAX is 3.15 times less risky than SMA Solar. It trades about -0.14 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.18 per unit of risk. If you would invest 19,468 in Xtrackers LevDAX on August 29, 2024 and sell it today you would lose (1,046) from holding Xtrackers LevDAX or give up 5.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Xtrackers LevDAX vs. SMA Solar Technology
Performance |
| Timeline |
| Xtrackers LevDAX |
| SMA Solar Technology |
Xtrackers LevDAX and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and SMA Solar
The main advantage of trading using opposite Xtrackers LevDAX and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar'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 |
| SMA Solar vs. Mitsui Chemicals | SMA Solar vs. AWILCO DRILLING PLC | SMA Solar vs. TYSON FOODS A | SMA Solar vs. Tyson Foods |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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