Correlation Between Xtrackers Nikkei and Source KBW
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By analyzing existing cross correlation between Xtrackers Nikkei 225 and Source KBW NASDAQ, you can compare the effects of market volatilities on Xtrackers Nikkei and Source KBW 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 Nikkei with a short position of Source KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and Source KBW.
Diversification Opportunities for Xtrackers Nikkei and Source KBW
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and Source is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and Source KBW NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source KBW NASDAQ and Xtrackers Nikkei 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 Nikkei 225 are associated (or correlated) with Source KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source KBW NASDAQ has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and Source KBW go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and Source KBW
Assuming the 90 days trading horizon Xtrackers Nikkei is expected to generate 1.9 times less return on investment than Source KBW. But when comparing it to its historical volatility, Xtrackers Nikkei 225 is 1.14 times less risky than Source KBW. It trades about 0.1 of its potential returns per unit of risk. Source KBW NASDAQ is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,572 in Source KBW NASDAQ on September 12, 2024 and sell it today you would earn a total of 221.00 from holding Source KBW NASDAQ or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. Source KBW NASDAQ
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| Source KBW NASDAQ |
Xtrackers Nikkei and Source KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and Source KBW
The main advantage of trading using opposite Xtrackers Nikkei and Source KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, Source KBW 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 Source KBW will offset losses from the drop in Source KBW's long position.| Xtrackers Nikkei vs. UBS Fund Solutions | Xtrackers Nikkei vs. Xtrackers II | Xtrackers Nikkei vs. iShares VII PLC | Xtrackers Nikkei vs. SPDR Gold Shares |
| Source KBW vs. UBS Fund Solutions | Source KBW vs. Xtrackers II | Source KBW vs. Xtrackers Nikkei 225 | Source KBW vs. iShares VII PLC |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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