Correlation Between Xtrackers LevDAX and WOLFDEN RES

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Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and WOLFDEN RES 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 WOLFDEN RES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and WOLFDEN RES P, you can compare the effects of market volatilities on Xtrackers LevDAX and WOLFDEN RES 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 WOLFDEN RES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and WOLFDEN RES.

Diversification Opportunities for Xtrackers LevDAX and WOLFDEN RES

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Xtrackers and WOLFDEN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and WOLFDEN RES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOLFDEN RES P 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 WOLFDEN RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOLFDEN RES P has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and WOLFDEN RES go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and WOLFDEN RES

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 12.72 times less return on investment than WOLFDEN RES. But when comparing it to its historical volatility, Xtrackers LevDAX is 19.85 times less risky than WOLFDEN RES. It trades about 0.08 of its potential returns per unit of risk. WOLFDEN RES P is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in WOLFDEN RES P on October 29, 2024 and sell it today you would lose (9.65) from holding WOLFDEN RES P or give up 80.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Xtrackers LevDAX  vs.  WOLFDEN RES P

 Performance 
       Timeline  
Xtrackers LevDAX 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers LevDAX reported solid returns over the last few months and may actually be approaching a breakup point.
WOLFDEN RES P 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in WOLFDEN RES P are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WOLFDEN RES reported solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers LevDAX and WOLFDEN RES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers LevDAX and WOLFDEN RES

The main advantage of trading using opposite Xtrackers LevDAX and WOLFDEN RES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, WOLFDEN RES 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 WOLFDEN RES will offset losses from the drop in WOLFDEN RES's long position.
The idea behind Xtrackers LevDAX and WOLFDEN RES P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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