Correlation Between Xtrackers LevDAX and National Health
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and National Health 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 National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and National Health Investors, you can compare the effects of market volatilities on Xtrackers LevDAX and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and National Health.
Diversification Opportunities for Xtrackers LevDAX and National Health
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and National is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and National Health go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and National Health
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.77 times less return on investment than National Health. But when comparing it to its historical volatility, Xtrackers LevDAX is 1.03 times less risky than National Health. It trades about 0.05 of its potential returns per unit of risk. National Health Investors is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,476 in National Health Investors on August 31, 2024 and sell it today you would earn a total of 2,774 from holding National Health Investors or generate 61.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. National Health Investors
Performance |
| Timeline |
| Xtrackers LevDAX |
| National Health Investors |
Xtrackers LevDAX and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and National Health
The main advantage of trading using opposite Xtrackers LevDAX and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health'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 |
| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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