Correlation Between Xtrackers LevDAX and CPU SOFTWAREHOUSE

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

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

Diversification Opportunities for Xtrackers LevDAX and CPU SOFTWAREHOUSE

-0.53

Correlation Coefficient

Xtrackers LevDAX  CPU SOFTWAREHOUSE

Excellent diversification

The 3 months correlation between Xtrackers and CPU is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and CPU SOFTWAREHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPU SOFTWAREHOUSE and Xtrackers LevDAX 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 LevDAX are associated (or correlated) with CPU SOFTWAREHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPU SOFTWAREHOUSE has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and CPU SOFTWAREHOUSE go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and CPU SOFTWAREHOUSE

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.29 times more return on investment than CPU SOFTWAREHOUSE. However, Xtrackers LevDAX is 3.39 times less risky than CPU SOFTWAREHOUSE. It trades about 0.28 of its potential returns per unit of risk. CPU SOFTWAREHOUSE is currently generating about 0.02 per unit of risk. If you would invest  18,422  in Xtrackers LevDAX on September 21, 2024 and sell it today you would earn a total of  2,308  from holding Xtrackers LevDAX or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xtrackers LevDAX  vs.  CPU SOFTWAREHOUSE

Xtrackers LevDAX

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers LevDAX reported solid returns over the last few months and may actually be approaching a breakup point.

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPU SOFTWAREHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CPU SOFTWAREHOUSE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xtrackers LevDAX and CPU SOFTWAREHOUSE

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

The idea behind Xtrackers LevDAX and CPU SOFTWAREHOUSE 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..