Correlation Between Xtrackers and Amundi Index

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

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

Diversification Opportunities for Xtrackers and Amundi Index

0.98

Correlation Coefficient

Xtrackers  Amundi Index

Almost no diversification

The 3 months correlation between Xtrackers and Amundi is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions 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 SP are associated (or correlated) with Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Xtrackers i.e., Xtrackers and Amundi Index go up and down completely randomly.

Pair Corralation between Xtrackers and Amundi Index

Assuming the 90 days trading horizon Xtrackers SP is expected to generate 1.59 times more return on investment than Amundi Index. However, Xtrackers is 1.59 times more volatile than Amundi Index Solutions. It trades about -0.12 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about -0.22 per unit of risk. If you would invest  23,445  in Xtrackers SP on October 4, 2024 and sell it today you would lose (605.00) from holding Xtrackers SP or give up 2.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Xtrackers SP  vs.  Amundi Index Solutions

Xtrackers SP

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers reported solid returns over the last few months and may actually be approaching a breakup point.

Amundi Index Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Amundi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers and Amundi Index

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

The idea behind Xtrackers SP and Amundi Index Solutions 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 Commodity Directory module to find actively traded commodities issued by global exchanges.