Correlation Between Xtrackers Short and BCULC

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

By analyzing existing cross correlation between Xtrackers Short Duration and BCULC 35 15 FEB 29, you can compare the effects of market volatilities on Xtrackers Short and BCULC 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 Short with a short position of BCULC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Short and BCULC.

Diversification Opportunities for Xtrackers Short and BCULC

0.68

Correlation Coefficient

Xtrackers Short  BCULC

Poor diversification

The 3 months correlation between Xtrackers and BCULC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Short Duration and BCULC 35 15 FEB 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCULC 35 15 and Xtrackers Short 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 Short Duration are associated (or correlated) with BCULC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCULC 35 15 has no effect on the direction of Xtrackers Short i.e., Xtrackers Short and BCULC go up and down completely randomly.

Pair Corralation between Xtrackers Short and BCULC

Given the investment horizon of 90 days Xtrackers Short Duration is expected to generate 0.38 times more return on investment than BCULC. However, Xtrackers Short Duration is 2.64 times less risky than BCULC. It trades about 0.02 of its potential returns per unit of risk. BCULC 35 15 FEB 29 is currently generating about -0.21 per unit of risk. If you would invest  4,452  in Xtrackers Short Duration on September 27, 2024 and sell it today you would earn a total of  12.50  from holding Xtrackers Short Duration or generate 0.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.94%
Values	Daily Returns

Xtrackers Short Duration  vs.  BCULC 35 15 FEB 29

Xtrackers Short Duration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Short Duration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Xtrackers Short is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

BCULC 35 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCULC 35 15 FEB 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BCULC 35 15 FEB 29 investors.

Pair Trading with Xtrackers Short and BCULC

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

The idea behind Xtrackers Short Duration and BCULC 35 15 FEB 29 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.