Correlation Between Xtrackers California and Blackline

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Can any of the company-specific risk be diversified away by investing in both Xtrackers California and Blackline 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 Blackline 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 Blackline, you can compare the effects of market volatilities on Xtrackers California and Blackline 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 Blackline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Blackline.

Diversification Opportunities for Xtrackers California and Blackline

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Xtrackers and Blackline is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline 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 Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of Xtrackers California i.e., Xtrackers California and Blackline go up and down completely randomly.

Pair Corralation between Xtrackers California and Blackline

Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate about the same return on investment as Blackline. But, Xtrackers California Municipal is 15.11 times less risky than Blackline. It trades about 0.05 of its potential returns per unit of risk. Blackline is currently generating about 0.0 per unit of risk. If you would invest  7,698  in Blackline on December 19, 2023 and sell it today you would lose (1,299) from holding Blackline or give up 16.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy12.9%
ValuesDaily Returns

Xtrackers California Municipal  vs.  Blackline

 Performance 
       Timeline  
Xtrackers California 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers California Municipal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Blackline 

Risk-Adjusted Performance

1 of 100

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

Xtrackers California and Blackline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers California and Blackline

The main advantage of trading using opposite Xtrackers California and Blackline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, Blackline 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 Blackline will offset losses from the drop in Blackline's long position.
The idea behind Xtrackers California Municipal and Blackline 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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