Correlation Between LG DAX and Xtrackers LevDAX
Can any of the company-specific risk be diversified away by investing in both LG DAX and Xtrackers LevDAX 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 LG DAX and Xtrackers LevDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG DAX Daily and Xtrackers LevDAX, you can compare the effects of market volatilities on LG DAX and Xtrackers LevDAX 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 LG DAX with a short position of Xtrackers LevDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG DAX and Xtrackers LevDAX.
Diversification Opportunities for LG DAX and Xtrackers LevDAX
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DES2 and Xtrackers is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding LG DAX Daily and Xtrackers LevDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers LevDAX and LG DAX 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 LG DAX Daily are associated (or correlated) with Xtrackers LevDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers LevDAX has no effect on the direction of LG DAX i.e., LG DAX and Xtrackers LevDAX go up and down completely randomly.
Pair Corralation between LG DAX and Xtrackers LevDAX
Assuming the 90 days trading horizon LG DAX Daily is expected to generate 0.93 times more return on investment than Xtrackers LevDAX. However, LG DAX Daily is 1.08 times less risky than Xtrackers LevDAX. It trades about 0.09 of its potential returns per unit of risk. Xtrackers LevDAX is currently generating about -0.08 per unit of risk. If you would invest 97.00 in LG DAX Daily on August 24, 2024 and sell it today you would earn a total of 3.00 from holding LG DAX Daily or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG DAX Daily vs. Xtrackers LevDAX
Performance |
| Timeline |
| LG DAX Daily |
| Xtrackers LevDAX |
LG DAX and Xtrackers LevDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG DAX and Xtrackers LevDAX
The main advantage of trading using opposite LG DAX and Xtrackers LevDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG DAX position performs unexpectedly, Xtrackers LevDAX 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 Xtrackers LevDAX will offset losses from the drop in Xtrackers LevDAX's long position.| LG DAX vs. LG DAX Daily | LG DAX vs. iShares Govt Bond | LG DAX vs. Amundi MSCI Europe | LG DAX vs. iShares Global AAA AA |
| Xtrackers LevDAX vs. UBS Fund Solutions | Xtrackers LevDAX vs. Xtrackers II | Xtrackers LevDAX vs. Xtrackers Nikkei 225 | Xtrackers LevDAX vs. SPDR Gold Shares |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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