Correlation Between Xtrackers LevDAX and Fuji Media

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

By analyzing existing cross correlation between Xtrackers LevDAX and Fuji Media Holdings, you can compare the effects of market volatilities on Xtrackers LevDAX and Fuji Media 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 Fuji Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Fuji Media.

Diversification Opportunities for Xtrackers LevDAX and Fuji Media

-0.57

Correlation Coefficient

Xtrackers LevDAX  Fuji Media

Excellent diversification

The 3 months correlation between Xtrackers and Fuji is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Fuji Media go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Fuji Media

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 8.67 times less return on investment than Fuji Media. In addition to that, Xtrackers LevDAX is 1.04 times more volatile than Fuji Media Holdings. It trades about 0.01 of its total potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.05 per unit of volatility. If you would invest  1,030  in Fuji Media Holdings on September 1, 2024 and sell it today you would earn a total of  40.00  from holding Fuji Media Holdings or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Xtrackers LevDAX  vs.  Fuji Media Holdings

Xtrackers LevDAX

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Fuji Media Holdings

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fuji Media is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers LevDAX and Fuji Media

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

The idea behind Xtrackers LevDAX and Fuji Media Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.