Correlation Between LG DAX and LG DAX

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

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

Diversification Opportunities for LG DAX and LG DAX

0.97

Correlation Coefficient

LG DAX  LG DAX

Almost no diversification

The 3 months correlation between DES2 and DES2 is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding LG DAX Daily and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily and LG DAX 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 LG DAX Daily are associated (or correlated) with LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of LG DAX i.e., LG DAX and LG DAX go up and down completely randomly.

Pair Corralation between LG DAX and LG DAX

Assuming the 90 days trading horizon LG DAX Daily is expected to under-perform the LG DAX. But the etf apears to be less risky and, when comparing its historical volatility, LG DAX Daily is 1.02 times less risky than LG DAX. The etf trades about -0.05 of its potential returns per unit of risk. The LG DAX Daily is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  147.00  in LG DAX Daily on October 4, 2024 and sell it today you would lose (54.00) from holding LG DAX Daily or give up 36.73% of portfolio value over 90 days.

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

LG DAX Daily  vs.  LG DAX Daily

LG DAX Daily

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG DAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

LG DAX Daily

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG DAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with LG DAX and LG DAX

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

The idea behind LG DAX Daily and LG DAX Daily 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.