Correlation Between Xtrackers USD and VanEck Fallen
Can any of the company-specific risk be diversified away by investing in both Xtrackers USD and VanEck Fallen 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 USD and VanEck Fallen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers USD High and VanEck Fallen Angel, you can compare the effects of market volatilities on Xtrackers USD and VanEck Fallen 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 USD with a short position of VanEck Fallen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers USD and VanEck Fallen.
Diversification Opportunities for Xtrackers USD and VanEck Fallen
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and VanEck is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and VanEck Fallen Angel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Fallen Angel and Xtrackers USD 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 USD High are associated (or correlated) with VanEck Fallen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Fallen Angel has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and VanEck Fallen go up and down completely randomly.
Pair Corralation between Xtrackers USD and VanEck Fallen
Given the investment horizon of 90 days Xtrackers USD High is expected to generate 0.92 times more return on investment than VanEck Fallen. However, Xtrackers USD High is 1.09 times less risky than VanEck Fallen. It trades about 0.16 of its potential returns per unit of risk. VanEck Fallen Angel is currently generating about 0.12 per unit of risk. If you would invest 3,265 in Xtrackers USD High on August 26, 2024 and sell it today you would earn a total of 387.00 from holding Xtrackers USD High or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers USD High vs. VanEck Fallen Angel
Performance |
| Timeline |
| Xtrackers USD High |
| VanEck Fallen Angel |
Xtrackers USD and VanEck Fallen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers USD and VanEck Fallen
The main advantage of trading using opposite Xtrackers USD and VanEck Fallen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD position performs unexpectedly, VanEck Fallen 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 VanEck Fallen will offset losses from the drop in VanEck Fallen's long position.| Xtrackers USD vs. First Trust Senior | Xtrackers USD vs. First Trust Low | Xtrackers USD vs. First Trust Enhanced | Xtrackers USD vs. First Trust TCW |
| VanEck Fallen vs. First Trust Senior | VanEck Fallen vs. First Trust Low | VanEck Fallen vs. First Trust Enhanced | VanEck Fallen vs. First Trust TCW |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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