Correlation Between TAO and Xtrackers Harvest

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

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

Diversification Opportunities for TAO and Xtrackers Harvest

0.0

Correlation Coefficient

TAO  Xtrackers Harvest

Pay attention - limited upside

The 3 months correlation between TAO and Xtrackers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TAO and Xtrackers Harvest CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI and TAO 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 TAO are associated (or correlated) with Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI has no effect on the direction of TAO i.e., TAO and Xtrackers Harvest go up and down completely randomly.

Pair Corralation between TAO and Xtrackers Harvest

If you would invest  2,451  in Xtrackers Harvest CSI on February 4, 2024 and sell it today you would earn a total of  87.00  from holding Xtrackers Harvest CSI or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TAO  vs.  Xtrackers Harvest CSI

TAO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TAO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Xtrackers Harvest CSI

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Harvest CSI are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Xtrackers Harvest reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAO and Xtrackers Harvest

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

The idea behind TAO and Xtrackers Harvest CSI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.