Correlation Between Xtrackers LevDAX and Xtrackers

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Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Xtrackers 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 Xtrackers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Xtrackers SP, you can compare the effects of market volatilities on Xtrackers LevDAX and Xtrackers 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 Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Xtrackers.

Diversification Opportunities for Xtrackers LevDAX and Xtrackers

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Xtrackers and Xtrackers is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Xtrackers SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Xtrackers go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Xtrackers

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 2.22 times more return on investment than Xtrackers. However, Xtrackers LevDAX is 2.22 times more volatile than Xtrackers SP. It trades about 0.0 of its potential returns per unit of risk. Xtrackers SP is currently generating about -0.2 per unit of risk. If you would invest  26,555  in Xtrackers LevDAX on May 5, 2025 and sell it today you would lose (290.00) from holding Xtrackers LevDAX or give up 1.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Xtrackers LevDAX  vs.  Xtrackers SP

 Performance 
       Timeline  
Xtrackers LevDAX 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Xtrackers LevDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers LevDAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Xtrackers SP 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Xtrackers SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Xtrackers LevDAX and Xtrackers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers LevDAX and Xtrackers

The main advantage of trading using opposite Xtrackers LevDAX and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Xtrackers 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 will offset losses from the drop in Xtrackers' long position.
The idea behind Xtrackers LevDAX and Xtrackers SP 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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