Correlation Between DBX ETF and RiverFront Dynamic
Can any of the company-specific risk be diversified away by investing in both DBX ETF and RiverFront Dynamic 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 RiverFront Dynamic 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 RiverFront Dynamic Flex Cap, you can compare the effects of market volatilities on DBX ETF and RiverFront Dynamic 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 RiverFront Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and RiverFront Dynamic.
Diversification Opportunities for DBX ETF and RiverFront Dynamic
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DBX and RiverFront is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and RiverFront Dynamic Flex Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Dynamic Flex 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 RiverFront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Dynamic Flex has no effect on the direction of DBX ETF i.e., DBX ETF and RiverFront Dynamic go up and down completely randomly.
Pair Corralation between DBX ETF and RiverFront Dynamic
Given the investment horizon of 90 days DBX ETF is expected to generate 1.19 times less return on investment than RiverFront Dynamic. But when comparing it to its historical volatility, DBX ETF Trust is 1.11 times less risky than RiverFront Dynamic. It trades about 0.11 of its potential returns per unit of risk. RiverFront Dynamic Flex Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,911 in RiverFront Dynamic Flex Cap on November 3, 2024 and sell it today you would earn a total of 1,128 from holding RiverFront Dynamic Flex Cap or generate 22.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
DBX ETF Trust vs. RiverFront Dynamic Flex Cap
Performance |
| Timeline |
| DBX ETF Trust |
| RiverFront Dynamic Flex |
DBX ETF and RiverFront Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBX ETF and RiverFront Dynamic
The main advantage of trading using opposite DBX ETF and RiverFront Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF position performs unexpectedly, RiverFront Dynamic 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 RiverFront Dynamic will offset losses from the drop in RiverFront Dynamic's long position.| DBX ETF vs. SPDR MSCI USA | DBX ETF vs. American Century STOXX | DBX ETF vs. Hartford Multifactor Equity | DBX ETF vs. PIMCO RAFI Dynamic |
| RiverFront Dynamic vs. RiverFront Dynamic Dividend | RiverFront Dynamic vs. RiverFront Dynamic Core | RiverFront Dynamic vs. Hartford Multifactor Equity | RiverFront Dynamic vs. Hartford Multifactor Emerging |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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