Correlation Between Xtrackers California and Apple
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and Apple 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 California and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and Apple Inc, you can compare the effects of market volatilities on Xtrackers California and Apple 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 California with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Apple.
Diversification Opportunities for Xtrackers California and Apple
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Xtrackers and Apple is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Xtrackers California 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 California Municipal are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Xtrackers California i.e., Xtrackers California and Apple go up and down completely randomly.
Pair Corralation between Xtrackers California and Apple
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 0.15 times more return on investment than Apple. However, Xtrackers California Municipal is 6.53 times less risky than Apple. It trades about -0.16 of its potential returns per unit of risk. Apple Inc is currently generating about -0.19 per unit of risk. If you would invest 2,519 in Xtrackers California Municipal on January 20, 2024 and sell it today you would lose (23.00) from holding Xtrackers California Municipal or give up 0.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Xtrackers California Municipal vs. Apple Inc
Performance |
Timeline |
Xtrackers California |
Apple Inc |
Xtrackers California and Apple Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers California and Apple
The main advantage of trading using opposite Xtrackers California and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.Xtrackers California vs. Vanguard Total Stock | Xtrackers California vs. SPDR SP 500 | Xtrackers California vs. iShares Core SP | Xtrackers California vs. Vanguard Total Bond |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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