Correlation Between Xtrackers LevDAX and KKR REAL

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

By analyzing existing cross correlation between Xtrackers LevDAX and KKR REAL ESTFINTR, you can compare the effects of market volatilities on Xtrackers LevDAX and KKR REAL 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 KKR REAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and KKR REAL.

Diversification Opportunities for Xtrackers LevDAX and KKR REAL

0.5

Correlation Coefficient

Xtrackers LevDAX  KKR REAL

Very weak diversification

The 3 months correlation between Xtrackers and KKR is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and KKR REAL ESTFINTR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR REAL ESTFINTR 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 KKR REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR REAL ESTFINTR has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and KKR REAL go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and KKR REAL

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.02 times more return on investment than KKR REAL. However, Xtrackers LevDAX is 1.02 times more volatile than KKR REAL ESTFINTR. It trades about 0.26 of its potential returns per unit of risk. KKR REAL ESTFINTR is currently generating about 0.05 per unit of risk. If you would invest  20,005  in Xtrackers LevDAX on December 20, 2024 and sell it today you would earn a total of  6,745  from holding Xtrackers LevDAX or generate 33.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Xtrackers LevDAX  vs.  KKR REAL ESTFINTR

Xtrackers LevDAX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 20 (%) 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.

KKR REAL ESTFINTR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KKR REAL ESTFINTR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KKR REAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers LevDAX and KKR REAL

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

The idea behind Xtrackers LevDAX and KKR REAL ESTFINTR 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.