Correlation Between Encavis AG and Xtrackers LevDAX
Can any of the company-specific risk be diversified away by investing in both Encavis AG 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 Encavis AG and Xtrackers LevDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encavis AG and Xtrackers LevDAX, you can compare the effects of market volatilities on Encavis AG 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 Encavis AG with a short position of Xtrackers LevDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encavis AG and Xtrackers LevDAX.
Diversification Opportunities for Encavis AG and Xtrackers LevDAX
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Encavis and Xtrackers is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Encavis AG and Xtrackers LevDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers LevDAX and Encavis AG 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 Encavis AG 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 Encavis AG i.e., Encavis AG and Xtrackers LevDAX go up and down completely randomly.
Pair Corralation between Encavis AG and Xtrackers LevDAX
Assuming the 90 days trading horizon Encavis AG is expected to generate 0.34 times more return on investment than Xtrackers LevDAX. However, Encavis AG is 2.97 times less risky than Xtrackers LevDAX. It trades about -0.01 of its potential returns per unit of risk. Xtrackers LevDAX is currently generating about -0.03 per unit of risk. If you would invest 1,713 in Encavis AG on September 4, 2024 and sell it today you would lose (3.00) from holding Encavis AG or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Encavis AG vs. Xtrackers LevDAX
Performance |
| Timeline |
| Encavis AG |
| Xtrackers LevDAX |
Encavis AG and Xtrackers LevDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encavis AG and Xtrackers LevDAX
The main advantage of trading using opposite Encavis AG and Xtrackers LevDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encavis AG 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.| Encavis AG vs. SCOTT TECHNOLOGY | Encavis AG vs. Axway Software SA | Encavis AG vs. Casio Computer CoLtd | Encavis AG vs. AECOM TECHNOLOGY |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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