Correlation Between Xtrackers Nikkei and Source Markets
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei and Source Markets 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 Nikkei and Source Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Nikkei 225 and Source Markets plc, you can compare the effects of market volatilities on Xtrackers Nikkei and Source Markets 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 Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and Source Markets.
Diversification Opportunities for Xtrackers Nikkei and Source Markets
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and Source is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and Source Markets plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source Markets plc 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 Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source Markets plc has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and Source Markets go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and Source Markets
Assuming the 90 days trading horizon Xtrackers Nikkei 225 is expected to generate 0.68 times more return on investment than Source Markets. However, Xtrackers Nikkei 225 is 1.46 times less risky than Source Markets. It trades about 0.04 of its potential returns per unit of risk. Source Markets plc is currently generating about 0.0 per unit of risk. If you would invest 2,016 in Xtrackers Nikkei 225 on September 4, 2024 and sell it today you would earn a total of 454.00 from holding Xtrackers Nikkei 225 or generate 22.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. Source Markets plc
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| Source Markets plc |
Xtrackers Nikkei and Source Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and Source Markets
The main advantage of trading using opposite Xtrackers Nikkei and Source Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, Source Markets 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 Markets will offset losses from the drop in Source Markets' long position.| Xtrackers Nikkei vs. Xtrackers II Global | Xtrackers Nikkei vs. Xtrackers FTSE | Xtrackers Nikkei vs. Xtrackers SP 500 | Xtrackers Nikkei vs. Xtrackers MSCI |
| Source Markets vs. Source JPX Nikkei 400 | Source Markets vs. Source Markets plc | Source Markets vs. Source Markets plc | Source Markets vs. Source KBW NASDAQ |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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