Correlation Between Xtrackers California and HP
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and HP 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 HP 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 HP Inc, you can compare the effects of market volatilities on Xtrackers California and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and HP.
Diversification Opportunities for Xtrackers California and HP
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Xtrackers and HP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Xtrackers California i.e., Xtrackers California and HP go up and down completely randomly.
Pair Corralation between Xtrackers California and HP
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 0.18 times more return on investment than HP. However, Xtrackers California Municipal is 5.54 times less risky than HP. It trades about -0.16 of its potential returns per unit of risk. HP Inc is currently generating about -0.24 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xtrackers California Municipal vs. HP Inc
Performance |
| Timeline |
| Xtrackers California |
| HP Inc |
Xtrackers California and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and HP
The main advantage of trading using opposite Xtrackers California and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, HP 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 HP will offset losses from the drop in HP'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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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