Correlation Between Xtrackers California and Invesco

Can any of the company-specific risk be diversified away by investing in both Xtrackers California and Invesco 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 Invesco 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 Invesco, you can compare the effects of market volatilities on Xtrackers California and Invesco 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 Invesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Invesco.

Diversification Opportunities for Xtrackers California and Invesco

-0.46

Correlation Coefficient

Xtrackers California  Invesco

Very good diversification

The 3 months correlation between Xtrackers and Invesco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of Xtrackers California i.e., Xtrackers California and Invesco go up and down completely randomly.

Pair Corralation between Xtrackers California and Invesco

If you would invest  2,491  in Xtrackers California Municipal on September 25, 2024 and sell it today you would earn a total of  22.00  from holding Xtrackers California Municipal or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.38%
Values	Daily Returns

Xtrackers California Municipal  vs.  Invesco

Xtrackers California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Invesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Invesco is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Xtrackers California and Invesco

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

The idea behind Xtrackers California Municipal and Invesco 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.