Correlation Between Xtrackers LevDAX and Intel

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

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

Diversification Opportunities for Xtrackers LevDAX and Intel

-0.64

Correlation Coefficient

Xtrackers LevDAX  Intel

Excellent diversification

The 3 months correlation between Xtrackers and Intel is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Intel go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Intel

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.61 times more return on investment than Intel. However, Xtrackers LevDAX is 1.63 times less risky than Intel. It trades about 0.29 of its potential returns per unit of risk. Intel is currently generating about -0.28 per unit of risk. If you would invest  18,422  in Xtrackers LevDAX on September 22, 2024 and sell it today you would earn a total of  2,308  from holding Xtrackers LevDAX or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Xtrackers LevDAX  vs.  Intel

Xtrackers LevDAX

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 9 (%) 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.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Xtrackers LevDAX and Intel

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

The idea behind Xtrackers LevDAX and Intel 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.