Correlation Between Xtrackers and International Business
Can any of the company-specific risk be diversified away by investing in both Xtrackers and International Business 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 and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and International Business Machines, you can compare the effects of market volatilities on Xtrackers and International Business 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 with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and International Business.
Diversification Opportunities for Xtrackers and International Business
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and International is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Xtrackers 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 II are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Xtrackers i.e., Xtrackers and International Business go up and down completely randomly.
Pair Corralation between Xtrackers and International Business
Assuming the 90 days trading horizon Xtrackers II is expected to generate 0.17 times more return on investment than International Business. However, Xtrackers II is 5.86 times less risky than International Business. It trades about -0.06 of its potential returns per unit of risk. International Business Machines is currently generating about -0.04 per unit of risk. If you would invest 1,571 in Xtrackers II on January 24, 2024 and sell it today you would lose (7.00) from holding Xtrackers II or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Xtrackers II vs. International Business Machine
Performance |
| Timeline |
| Xtrackers II |
| International Business |
Xtrackers and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and International Business
The main advantage of trading using opposite Xtrackers and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Xtrackers vs. Xtrackers FTSE | Xtrackers vs. Xtrackers SP 500 | Xtrackers vs. Xtrackers MSCI | Xtrackers vs. Xtrackers Stoxx |
| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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