Correlation Between FinVolution and DBX ETF

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

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

Diversification Opportunities for FinVolution and DBX ETF

0.3

Correlation Coefficient

FinVolution  DBX ETF

Weak diversification

The 3 months correlation between FinVolution and DBX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX ETF Trust and FinVolution 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 FinVolution Group are associated (or correlated) with DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of FinVolution i.e., FinVolution and DBX ETF go up and down completely randomly.

Pair Corralation between FinVolution and DBX ETF

Given the investment horizon of 90 days FinVolution Group is expected to generate 2.8 times more return on investment than DBX ETF. However, FinVolution is 2.8 times more volatile than DBX ETF Trust. It trades about 0.05 of its potential returns per unit of risk. DBX ETF Trust is currently generating about 0.1 per unit of risk. If you would invest  487.00  in FinVolution Group on October 21, 2024 and sell it today you would earn a total of  215.00  from holding FinVolution Group or generate 44.15% return on investment over 90 days.

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

FinVolution Group  vs.  DBX ETF Trust

FinVolution Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, FinVolution showed solid returns over the last few months and may actually be approaching a breakup point.

DBX ETF Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DBX ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, DBX ETF is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FinVolution and DBX ETF

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

The idea behind FinVolution Group and DBX ETF Trust 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.