Correlation Between DBX ETF and Xtrackers
Can any of the company-specific risk be diversified away by investing in both DBX ETF and Xtrackers 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 DBX ETF and Xtrackers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBX ETF Trust and Xtrackers SP 500, you can compare the effects of market volatilities on DBX ETF and Xtrackers 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 DBX ETF with a short position of Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and Xtrackers.
Diversification Opportunities for DBX ETF and Xtrackers
Almost no diversification
The 3 months correlation between DBX and Xtrackers is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 and DBX ETF 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 DBX ETF Trust are associated (or correlated) with Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of DBX ETF i.e., DBX ETF and Xtrackers go up and down completely randomly.
Pair Corralation between DBX ETF and Xtrackers
Given the investment horizon of 90 days DBX ETF Trust is expected to generate 1.26 times more return on investment than Xtrackers. However, DBX ETF is 1.26 times more volatile than Xtrackers SP 500. It trades about 0.09 of its potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.11 per unit of risk. If you would invest 2,874 in DBX ETF Trust on August 24, 2024 and sell it today you would earn a total of 369.00 from holding DBX ETF Trust or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBX ETF Trust vs. Xtrackers SP 500
Performance |
| Timeline |
| DBX ETF Trust |
| Xtrackers SP 500 |
DBX ETF and Xtrackers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBX ETF and Xtrackers
The main advantage of trading using opposite DBX ETF and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF position performs unexpectedly, Xtrackers 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 will offset losses from the drop in Xtrackers' long position.The idea behind DBX ETF Trust and Xtrackers SP 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers vs. iShares MSCI USA |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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