Correlation Between SPDR EURO and DXGE
Can any of the company-specific risk be diversified away by investing in both SPDR EURO and DXGE 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 SPDR EURO and DXGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR EURO STOXX and DXGE, you can compare the effects of market volatilities on SPDR EURO and DXGE 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 SPDR EURO with a short position of DXGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR EURO and DXGE.
Diversification Opportunities for SPDR EURO and DXGE
Very good diversification
The 3 months correlation between SPDR and DXGE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SPDR EURO STOXX and DXGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXGE and SPDR EURO 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 SPDR EURO STOXX are associated (or correlated) with DXGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXGE has no effect on the direction of SPDR EURO i.e., SPDR EURO and DXGE go up and down completely randomly.
Pair Corralation between SPDR EURO and DXGE
Considering the 90-day investment horizon SPDR EURO is expected to generate 1.75 times less return on investment than DXGE. In addition to that, SPDR EURO is 1.1 times more volatile than DXGE. It trades about 0.05 of its total potential returns per unit of risk. DXGE is currently generating about 0.1 per unit of volatility. If you would invest 3,157 in DXGE on August 30, 2024 and sell it today you would earn a total of 485.00 from holding DXGE or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.31% |
| Values | Daily Returns |
SPDR EURO STOXX vs. DXGE
Performance |
| Timeline |
| SPDR EURO STOXX |
| DXGE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR EURO and DXGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR EURO and DXGE
The main advantage of trading using opposite SPDR EURO and DXGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR EURO position performs unexpectedly, DXGE 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 DXGE will offset losses from the drop in DXGE's long position.| SPDR EURO vs. iShares MSCI Eurozone | SPDR EURO vs. iShares MSCI Germany | SPDR EURO vs. iShares MSCI United | SPDR EURO vs. iShares Europe ETF |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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