Correlation Between Xtrackers LevDAX and Sany Heavy
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Sany Heavy 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 Sany Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Sany Heavy Equipment, you can compare the effects of market volatilities on Xtrackers LevDAX and Sany Heavy 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 Sany Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Sany Heavy.
Diversification Opportunities for Xtrackers LevDAX and Sany Heavy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Sany is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Sany Heavy Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Equipment 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 Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Equipment has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Sany Heavy go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Sany Heavy
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.4 times more return on investment than Sany Heavy. However, Xtrackers LevDAX is 2.51 times less risky than Sany Heavy. It trades about 0.05 of its potential returns per unit of risk. Sany Heavy Equipment is currently generating about -0.01 per unit of risk. If you would invest 14,444 in Xtrackers LevDAX on September 4, 2024 and sell it today you would earn a total of 3,978 from holding Xtrackers LevDAX or generate 27.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Sany Heavy Equipment
Performance |
| Timeline |
| Xtrackers LevDAX |
| Sany Heavy Equipment |
Xtrackers LevDAX and Sany Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Sany Heavy
The main advantage of trading using opposite Xtrackers LevDAX and Sany Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Sany Heavy 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 Sany Heavy will offset losses from the drop in Sany Heavy'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 |
| Sany Heavy vs. Komatsu | Sany Heavy vs. CNH Industrial NV | Sany Heavy vs. KUBOTA P ADR20 | Sany Heavy vs. Hitachi Construction Machinery |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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