Correlation Between Xtrackers LevDAX and Amundi Obligataire

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

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

Diversification Opportunities for Xtrackers LevDAX and Amundi Obligataire

0.22

Correlation Coefficient

Xtrackers LevDAX  Amundi Obligataire

Modest diversification

The 3 months correlation between Xtrackers and Amundi is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Amundi Obligataire Diversifi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Obligataire and Xtrackers LevDAX 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 LevDAX are associated (or correlated) with Amundi Obligataire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Obligataire has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Amundi Obligataire go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Amundi Obligataire

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 10.95 times more return on investment than Amundi Obligataire. However, Xtrackers LevDAX is 10.95 times more volatile than Amundi Obligataire Diversifi. It trades about 0.23 of its potential returns per unit of risk. Amundi Obligataire Diversifi is currently generating about 0.0 per unit of risk. If you would invest  20,055  in Xtrackers LevDAX on December 26, 2024 and sell it today you would earn a total of  6,390  from holding Xtrackers LevDAX or generate 31.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Xtrackers LevDAX  vs.  Amundi Obligataire Diversifi

Xtrackers LevDAX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers LevDAX reported solid returns over the last few months and may actually be approaching a breakup point.

Amundi Obligataire

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi Obligataire Diversifi has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Amundi Obligataire is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xtrackers LevDAX and Amundi Obligataire

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

The idea behind Xtrackers LevDAX and Amundi Obligataire Diversifi 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .