Correlation Between DBX ETF and Freedom Day
Can any of the company-specific risk be diversified away by investing in both DBX ETF and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on DBX ETF and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBX ETF and Freedom Day.
Diversification Opportunities for DBX ETF and Freedom Day
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DBX and Freedom is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DBX ETF Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of DBX ETF i.e., DBX ETF and Freedom Day go up and down completely randomly.
Pair Corralation between DBX ETF and Freedom Day
Given the investment horizon of 90 days DBX ETF is expected to generate 2.67 times less return on investment than Freedom Day. But when comparing it to its historical volatility, DBX ETF Trust is 1.06 times less risky than Freedom Day. It trades about 0.03 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,458 in Freedom Day Dividend on September 14, 2024 and sell it today you would earn a total of 952.00 from holding Freedom Day Dividend or generate 38.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DBX ETF Trust vs. Freedom Day Dividend
Performance |
| Timeline |
| DBX ETF Trust |
| Freedom Day Dividend |
DBX ETF and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBX ETF and Freedom Day
The main advantage of trading using opposite DBX ETF and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBX ETF position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| DBX ETF vs. Freedom Day Dividend | DBX ETF vs. Franklin Templeton ETF | DBX ETF vs. iShares MSCI China | DBX ETF vs. Tidal Trust II |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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