Correlation Between Source Physical and Xtrackers Physical

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

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

Diversification Opportunities for Source Physical and Xtrackers Physical

0.94

Correlation Coefficient

Source Physical  Xtrackers Physical

Almost no diversification

The 3 months correlation between Source and Xtrackers is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Source Physical Palladium and Xtrackers Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Physical Gold and Source Physical 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 Source Physical Palladium are associated (or correlated) with Xtrackers Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Physical Gold has no effect on the direction of Source Physical i.e., Source Physical and Xtrackers Physical go up and down completely randomly.

Pair Corralation between Source Physical and Xtrackers Physical

Assuming the 90 days trading horizon Source Physical Palladium is expected to generate 1.82 times more return on investment than Xtrackers Physical. However, Source Physical is 1.82 times more volatile than Xtrackers Physical Gold. It trades about 0.16 of its potential returns per unit of risk. Xtrackers Physical Gold is currently generating about 0.21 per unit of risk. If you would invest  11,047  in Source Physical Palladium on September 3, 2025 and sell it today you would earn a total of  2,728  from holding Source Physical Palladium or generate 24.69% return on investment over 90 days.

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

Source Physical Palladium  vs.  Xtrackers Physical Gold

Source Physical Palladium

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Source Physical Palladium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Source Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers Physical Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Physical Gold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Xtrackers Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Source Physical and Xtrackers Physical

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

The idea behind Source Physical Palladium and Xtrackers Physical Gold 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.