Correlation Between Xtrackers and Exchange Listed

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

By analyzing existing cross correlation between Xtrackers SP 500 and Exchange Listed Funds, you can compare the effects of market volatilities on Xtrackers and Exchange Listed 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 Exchange Listed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Exchange Listed.

Diversification Opportunities for Xtrackers and Exchange Listed

0.77

Correlation Coefficient

Xtrackers  Exchange Listed

Poor diversification

The 3 months correlation between Xtrackers and Exchange is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds 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 SP 500 are associated (or correlated) with Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of Xtrackers i.e., Xtrackers and Exchange Listed go up and down completely randomly.

Pair Corralation between Xtrackers and Exchange Listed

Given the investment horizon of 90 days Xtrackers SP 500 is expected to generate 1.15 times more return on investment than Exchange Listed. However, Xtrackers is 1.15 times more volatile than Exchange Listed Funds. It trades about 0.07 of its potential returns per unit of risk. Exchange Listed Funds is currently generating about 0.07 per unit of risk. If you would invest  4,989  in Xtrackers SP 500 on September 29, 2024 and sell it today you would earn a total of  415.00  from holding Xtrackers SP 500 or generate 8.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Xtrackers SP 500  vs.  Exchange Listed Funds

Xtrackers SP 500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers SP 500 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Xtrackers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Exchange Listed Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Listed Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Exchange Listed is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xtrackers and Exchange Listed

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

The idea behind Xtrackers SP 500 and Exchange Listed Funds 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.