Correlation Between Xtrackers and LG Battery
Can any of the company-specific risk be diversified away by investing in both Xtrackers and LG Battery 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 LG Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and LG Battery Value Chain, you can compare the effects of market volatilities on Xtrackers and LG Battery 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 LG Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and LG Battery.
Diversification Opportunities for Xtrackers and LG Battery
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xtrackers and BATE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and LG Battery Value Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Battery Value 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 II are associated (or correlated) with LG Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Battery Value has no effect on the direction of Xtrackers i.e., Xtrackers and LG Battery go up and down completely randomly.
Pair Corralation between Xtrackers and LG Battery
Assuming the 90 days trading horizon Xtrackers II is expected to under-perform the LG Battery. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers II is 1.91 times less risky than LG Battery. The etf trades about -0.03 of its potential returns per unit of risk. The LG Battery Value Chain is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,508 in LG Battery Value Chain on November 5, 2024 and sell it today you would earn a total of 176.00 from holding LG Battery Value Chain or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers II vs. LG Battery Value Chain
Performance |
| Timeline |
| Xtrackers II |
| LG Battery Value |
Xtrackers and LG Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and LG Battery
The main advantage of trading using opposite Xtrackers and LG Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, LG Battery 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 LG Battery will offset losses from the drop in LG Battery's long position.| Xtrackers vs. Xtrackers II Global | Xtrackers vs. Xtrackers FTSE | Xtrackers vs. Xtrackers SP 500 | Xtrackers vs. Xtrackers MSCI |
| LG Battery vs. LG Battery Value Chain | LG Battery vs. iShares Govt Bond | LG Battery vs. Amundi MSCI Europe | LG Battery vs. iShares Global AAA AA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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