Correlation Between Xtrackers and Source SP
Can any of the company-specific risk be diversified away by investing in both Xtrackers and Source SP 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 Source SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and Source SP 500, you can compare the effects of market volatilities on Xtrackers and Source SP 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 Source SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Source SP.
Diversification Opportunities for Xtrackers and Source SP
Pay attention - limited upside
The 3 months correlation between Xtrackers and Source is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and Source SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source SP 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 II are associated (or correlated) with Source SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source SP 500 has no effect on the direction of Xtrackers i.e., Xtrackers and Source SP go up and down completely randomly.
Pair Corralation between Xtrackers and Source SP
Assuming the 90 days trading horizon Xtrackers II is expected to generate 53.66 times more return on investment than Source SP. However, Xtrackers is 53.66 times more volatile than Source SP 500. It trades about 0.04 of its potential returns per unit of risk. Source SP 500 is currently generating about 0.09 per unit of risk. If you would invest 915.00 in Xtrackers II on September 3, 2024 and sell it today you would lose (164.00) from holding Xtrackers II or give up 17.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Xtrackers II vs. Source SP 500
Performance |
| Timeline |
| Xtrackers II |
| Source SP 500 |
Xtrackers and Source SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and Source SP
The main advantage of trading using opposite Xtrackers and Source SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, Source SP 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 SP will offset losses from the drop in Source SP's long position.| Xtrackers vs. Xtrackers II Global | Xtrackers vs. Xtrackers FTSE | Xtrackers vs. Xtrackers SP 500 | Xtrackers vs. Xtrackers MSCI |
| Source SP vs. UBS Fund Solutions | Source SP vs. Xtrackers II | Source SP vs. Xtrackers Nikkei 225 | Source SP 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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