Correlation Between Xtrackers ShortDAX and Loews Corp
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Loews Corp 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 ShortDAX and Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Loews Corp, you can compare the effects of market volatilities on Xtrackers ShortDAX and Loews Corp 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 ShortDAX with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Loews Corp.
Diversification Opportunities for Xtrackers ShortDAX and Loews Corp
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Loews is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and Xtrackers ShortDAX 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 ShortDAX are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Loews Corp go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Loews Corp
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Loews Corp. In addition to that, Xtrackers ShortDAX is 1.51 times more volatile than Loews Corp. It trades about -0.13 of its total potential returns per unit of risk. Loews Corp is currently generating about -0.01 per unit of volatility. If you would invest 6,900 in Loews Corp on February 28, 2024 and sell it today you would lose (50.00) from holding Loews Corp or give up 0.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Xtrackers ShortDAX vs. Loews Corp
Performance |
Timeline |
Xtrackers ShortDAX |
Loews Corp |
Xtrackers ShortDAX and Loews Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers ShortDAX and Loews Corp
The main advantage of trading using opposite Xtrackers ShortDAX and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.Xtrackers ShortDAX vs. UBS Fund Solutions | Xtrackers ShortDAX vs. Xtrackers II | Xtrackers ShortDAX vs. Xtrackers Nikkei 225 | Xtrackers ShortDAX vs. SPDR Gold Shares |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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