Correlation Between Xtrackers and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both Xtrackers and SPDR ICE 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 SPDR ICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and SPDR ICE BofA, you can compare the effects of market volatilities on Xtrackers and SPDR ICE 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 SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and SPDR ICE.
Diversification Opportunities for Xtrackers and SPDR ICE
Very weak diversification
The 3 months correlation between Xtrackers and SPDR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and SPDR ICE BofA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE BofA 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 SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE BofA has no effect on the direction of Xtrackers i.e., Xtrackers and SPDR ICE go up and down completely randomly.
Pair Corralation between Xtrackers and SPDR ICE
Assuming the 90 days trading horizon Xtrackers II is expected to under-perform the SPDR ICE. In addition to that, Xtrackers is 2.55 times more volatile than SPDR ICE BofA. It trades about -0.04 of its total potential returns per unit of risk. SPDR ICE BofA is currently generating about 0.07 per unit of volatility. If you would invest 2,781 in SPDR ICE BofA on September 4, 2024 and sell it today you would earn a total of 131.00 from holding SPDR ICE BofA or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Xtrackers II vs. SPDR ICE BofA
Performance |
| Timeline |
| Xtrackers II |
| SPDR ICE BofA |
Xtrackers and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and SPDR ICE
The main advantage of trading using opposite Xtrackers and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, SPDR ICE 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 SPDR ICE will offset losses from the drop in SPDR ICE's long position.| Xtrackers vs. UBS Fund Solutions | Xtrackers vs. Xtrackers Nikkei 225 | Xtrackers vs. iShares VII PLC | Xtrackers vs. SPDR Gold Shares |
| SPDR ICE vs. UBS Fund Solutions | SPDR ICE vs. Xtrackers II | SPDR ICE vs. Xtrackers Nikkei 225 | SPDR ICE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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