Correlation Between Lyxor 1 and Xtrackers LevDAX
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 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 Lyxor 1 and Xtrackers LevDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Xtrackers LevDAX, you can compare the effects of market volatilities on Lyxor 1 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 Lyxor 1 with a short position of Xtrackers LevDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Xtrackers LevDAX.
Diversification Opportunities for Lyxor 1 and Xtrackers LevDAX
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lyxor and Xtrackers is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Xtrackers LevDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers LevDAX and Lyxor 1 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 Lyxor 1 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 Lyxor 1 i.e., Lyxor 1 and Xtrackers LevDAX go up and down completely randomly.
Pair Corralation between Lyxor 1 and Xtrackers LevDAX
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.98 times less return on investment than Xtrackers LevDAX. But when comparing it to its historical volatility, Lyxor 1 is 1.64 times less risky than Xtrackers LevDAX. It trades about 0.53 of its potential returns per unit of risk. Xtrackers LevDAX is currently generating about 0.64 of returns per unit of risk over similar time horizon. If you would invest 19,944 in Xtrackers LevDAX on November 4, 2024 and sell it today you would earn a total of 3,546 from holding Xtrackers LevDAX or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lyxor 1 vs. Xtrackers LevDAX
Performance |
| Timeline |
| Lyxor 1 |
| Xtrackers LevDAX |
Lyxor 1 and Xtrackers LevDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Xtrackers LevDAX
The main advantage of trading using opposite Lyxor 1 and Xtrackers LevDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 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.| Lyxor 1 vs. Lyxor Fed Funds | Lyxor 1 vs. Lyxor BofAML USD | Lyxor 1 vs. Lyxor Index Fund | Lyxor 1 vs. Lyxor 1 TecDAX |
| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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