Correlation Between Xtrackers ShortDAX and LEEF BRANDS

Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and LEEF BRANDS 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 ShortDAX and LEEF BRANDS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtrackers ShortDAX and LEEF BRANDS INC, you can compare the effects of market volatilities on Xtrackers ShortDAX and LEEF BRANDS 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 ShortDAX with a short position of LEEF BRANDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and LEEF BRANDS.

Diversification Opportunities for Xtrackers ShortDAX and LEEF BRANDS

-0.57

Correlation Coefficient

Xtrackers ShortDAX  LEEF BRANDS

Excellent diversification

The 3 months correlation between Xtrackers and LEEF is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and LEEF BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEEF BRANDS INC and Xtrackers ShortDAX 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 ShortDAX are associated (or correlated) with LEEF BRANDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEEF BRANDS INC has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and LEEF BRANDS go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and LEEF BRANDS

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 16.52 times less return on investment than LEEF BRANDS. But when comparing it to its historical volatility, Xtrackers ShortDAX is 22.79 times less risky than LEEF BRANDS. It trades about 0.42 of its potential returns per unit of risk. LEEF BRANDS INC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  12.00  in LEEF BRANDS INC on October 6, 2024 and sell it today you would earn a total of  10.00  from holding LEEF BRANDS INC or generate 83.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Xtrackers ShortDAX  vs.  LEEF BRANDS INC

Xtrackers ShortDAX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers ShortDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

LEEF BRANDS INC

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days LEEF BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, LEEF BRANDS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and LEEF BRANDS

The main advantage of trading using opposite Xtrackers ShortDAX and LEEF BRANDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, LEEF BRANDS 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 LEEF BRANDS will offset losses from the drop in LEEF BRANDS's long position.

The idea behind Xtrackers ShortDAX and LEEF BRANDS INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.