Correlation Between Xtrackers USD and HDAW

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

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

Diversification Opportunities for Xtrackers USD and HDAW

0.0

Correlation Coefficient

Xtrackers USD  HDAW

Pay attention - limited upside

The 3 months correlation between Xtrackers and HDAW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and HDAW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDAW and Xtrackers USD 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 USD High are associated (or correlated) with HDAW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDAW has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and HDAW go up and down completely randomly.

Pair Corralation between Xtrackers USD and HDAW

If you would invest  3,570  in Xtrackers USD High on December 28, 2024 and sell it today you would earn a total of  40.00  from holding Xtrackers USD High or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Xtrackers USD High  vs.  HDAW

Xtrackers USD High

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers USD High are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Xtrackers USD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HDAW

Risk-Adjusted Performance

Very Weak

Over the last 90 days HDAW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HDAW is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xtrackers USD and HDAW

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

The idea behind Xtrackers USD High and HDAW 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.