Correlation Between Xtrackers Stoxx and Xtrackers

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

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

Diversification Opportunities for Xtrackers Stoxx and Xtrackers

0.75

Correlation Coefficient

Xtrackers Stoxx  Xtrackers

Poor diversification

The 3 months correlation between Xtrackers and Xtrackers is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Stoxx and Xtrackers II Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers II Global and Xtrackers Stoxx 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 Stoxx are associated (or correlated) with Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers II Global has no effect on the direction of Xtrackers Stoxx i.e., Xtrackers Stoxx and Xtrackers go up and down completely randomly.

Pair Corralation between Xtrackers Stoxx and Xtrackers

Assuming the 90 days trading horizon Xtrackers Stoxx is expected to under-perform the Xtrackers. In addition to that, Xtrackers Stoxx is 2.64 times more volatile than Xtrackers II Global. It trades about -0.1 of its total potential returns per unit of risk. Xtrackers II Global is currently generating about -0.03 per unit of volatility. If you would invest  21,944  in Xtrackers II Global on September 4, 2024 and sell it today you would lose (167.00) from holding Xtrackers II Global or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Xtrackers Stoxx  vs.  Xtrackers II Global

Xtrackers Stoxx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers Stoxx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers Stoxx is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Xtrackers II Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers II Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Xtrackers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xtrackers Stoxx and Xtrackers

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

The idea behind Xtrackers Stoxx and Xtrackers II Global 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.