Correlation Between Xtrackers Nikkei and Expat Slovenia

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

By analyzing existing cross correlation between Xtrackers Nikkei 225 and Expat Slovenia SBI, you can compare the effects of market volatilities on Xtrackers Nikkei and Expat Slovenia 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 Nikkei with a short position of Expat Slovenia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and Expat Slovenia.

Diversification Opportunities for Xtrackers Nikkei and Expat Slovenia

-0.38

Correlation Coefficient

Xtrackers Nikkei  Expat Slovenia

Very good diversification

The 3 months correlation between Xtrackers and Expat is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and Expat Slovenia SBI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Slovenia SBI and Xtrackers Nikkei 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 Nikkei 225 are associated (or correlated) with Expat Slovenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Slovenia SBI has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and Expat Slovenia go up and down completely randomly.

Pair Corralation between Xtrackers Nikkei and Expat Slovenia

Assuming the 90 days trading horizon Xtrackers Nikkei 225 is expected to under-perform the Expat Slovenia. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers Nikkei 225 is 1.47 times less risky than Expat Slovenia. The etf trades about -0.14 of its potential returns per unit of risk. The Expat Slovenia SBI is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Expat Slovenia SBI on December 31, 2024 and sell it today you would earn a total of  38.00  from holding Expat Slovenia SBI or generate 20.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Xtrackers Nikkei 225  vs.  Expat Slovenia SBI

Xtrackers Nikkei 225

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers Nikkei 225 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's forward-looking 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.

Expat Slovenia SBI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expat Slovenia SBI are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Expat Slovenia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers Nikkei and Expat Slovenia

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

The idea behind Xtrackers Nikkei 225 and Expat Slovenia SBI 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.