Correlation Between Xtrackers and HCM Defender
Can any of the company-specific risk be diversified away by investing in both Xtrackers and HCM Defender 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 and HCM Defender into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers SP 500 and HCM Defender 500, you can compare the effects of market volatilities on Xtrackers and HCM Defender 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 with a short position of HCM Defender. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and HCM Defender.
Diversification Opportunities for Xtrackers and HCM Defender
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Xtrackers and HCM is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 and HCM Defender 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCM Defender 500 and Xtrackers 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 SP 500 are associated (or correlated) with HCM Defender. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCM Defender 500 has no effect on the direction of Xtrackers i.e., Xtrackers and HCM Defender go up and down completely randomly.
Pair Corralation between Xtrackers and HCM Defender
Given the investment horizon of 90 days Xtrackers is expected to generate 1.01 times less return on investment than HCM Defender. But when comparing it to its historical volatility, Xtrackers SP 500 is 1.18 times less risky than HCM Defender. It trades about 0.11 of its potential returns per unit of risk. HCM Defender 500 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,386 in HCM Defender 500 on August 30, 2024 and sell it today you would earn a total of 1,974 from holding HCM Defender 500 or generate 58.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers SP 500 vs. HCM Defender 500
Performance |
| Timeline |
| Xtrackers SP 500 |
| HCM Defender 500 |
Xtrackers and HCM Defender Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and HCM Defender
The main advantage of trading using opposite Xtrackers and HCM Defender positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, HCM Defender 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 HCM Defender will offset losses from the drop in HCM Defender's long position.| Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers vs. iShares MSCI USA |
| HCM Defender vs. JPMorgan BetaBuilders International | HCM Defender vs. JPMorgan Core Plus | HCM Defender vs. JPMorgan BetaBuilders Canada | HCM Defender vs. JPMorgan Emerging Markets |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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