Correlation Between Xtrackers USD and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Xtrackers USD and Federated Hermes 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 Federated Hermes 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 Federated Hermes ETF, you can compare the effects of market volatilities on Xtrackers USD and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers USD and Federated Hermes.
Diversification Opportunities for Xtrackers USD and Federated Hermes
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and Federated is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and Federated Hermes go up and down completely randomly.
Pair Corralation between Xtrackers USD and Federated Hermes
Given the investment horizon of 90 days Xtrackers USD High is expected to generate 1.29 times more return on investment than Federated Hermes. However, Xtrackers USD is 1.29 times more volatile than Federated Hermes ETF. It trades about 0.37 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.14 per unit of risk. If you would invest 3,616 in Xtrackers USD High on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Xtrackers USD High or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers USD High vs. Federated Hermes ETF
Performance |
| Timeline |
| Xtrackers USD High |
| Federated Hermes ETF |
Xtrackers USD and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers USD and Federated Hermes
The main advantage of trading using opposite Xtrackers USD and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Xtrackers USD vs. SPDR Bloomberg Emerging | Xtrackers USD vs. iShares Broad USD | Xtrackers USD vs. SPDR Barclays Intermediate | Xtrackers USD vs. Schwab Intermediate Term Treasury |
| Federated Hermes vs. Federated Hermes ETF | Federated Hermes vs. American Century ETF | Federated Hermes vs. Dimensional ETF Trust | Federated Hermes vs. Dimensional ETF Trust |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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