Correlation Between Xtrackers Nifty and Xtrackers

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

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

Diversification Opportunities for Xtrackers Nifty and Xtrackers

0.51

Correlation Coefficient

Xtrackers Nifty  Xtrackers

Very weak diversification

The 3 months correlation between Xtrackers and Xtrackers is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nifty and Xtrackers II Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers II Global and Xtrackers Nifty 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 Nifty 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 II Global has no effect on the direction of Xtrackers Nifty i.e., Xtrackers Nifty and Xtrackers go up and down completely randomly.

Pair Corralation between Xtrackers Nifty and Xtrackers

Assuming the 90 days trading horizon Xtrackers Nifty is expected to generate 2.58 times more return on investment than Xtrackers. However, Xtrackers Nifty is 2.58 times more volatile than Xtrackers II Global. It trades about 0.05 of its potential returns per unit of risk. Xtrackers II Global is currently generating about -0.14 per unit of risk. If you would invest  26,040  in Xtrackers Nifty on September 17, 2024 and sell it today you would earn a total of  640.00  from holding Xtrackers Nifty or generate 2.46% return on investment over 90 days.

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

Xtrackers Nifty  vs.  Xtrackers II Global

Xtrackers Nifty

Risk-Adjusted Performance

3 of 100

Insignificant

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

Xtrackers II Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Xtrackers Nifty and Xtrackers

The main advantage of trading using opposite Xtrackers Nifty and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nifty 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 Nifty and Xtrackers II Global 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.