Correlation Between Xtrackers LevDAX and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and THORNEY TECHS 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 THORNEY TECHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and THORNEY TECHS LTD, you can compare the effects of market volatilities on Xtrackers LevDAX and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and THORNEY TECHS.
Diversification Opportunities for Xtrackers LevDAX and THORNEY TECHS
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and THORNEY is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and THORNEY TECHS go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and THORNEY TECHS
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.07 times less return on investment than THORNEY TECHS. But when comparing it to its historical volatility, Xtrackers LevDAX is 3.37 times less risky than THORNEY TECHS. It trades about 0.05 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.45 in THORNEY TECHS LTD on August 31, 2024 and sell it today you would lose (1.30) from holding THORNEY TECHS LTD or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. THORNEY TECHS LTD
Performance |
| Timeline |
| Xtrackers LevDAX |
| THORNEY TECHS LTD |
Xtrackers LevDAX and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and THORNEY TECHS
The main advantage of trading using opposite Xtrackers LevDAX and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS'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 |
| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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