Correlation Between Xtrackers RREEF and MicroSectors Gold

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

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

Diversification Opportunities for Xtrackers RREEF and MicroSectors Gold

0.6

Correlation Coefficient

Xtrackers RREEF  MicroSectors Gold

Poor diversification

The 3 months correlation between Xtrackers and MicroSectors is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers RREEF Global and MicroSectors Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Gold Miners and Xtrackers RREEF 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 RREEF Global are associated (or correlated) with MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold Miners has no effect on the direction of Xtrackers RREEF i.e., Xtrackers RREEF and MicroSectors Gold go up and down completely randomly.

Pair Corralation between Xtrackers RREEF and MicroSectors Gold

Given the investment horizon of 90 days Xtrackers RREEF Global is expected to generate 0.17 times more return on investment than MicroSectors Gold. However, Xtrackers RREEF Global is 5.99 times less risky than MicroSectors Gold. It trades about -0.05 of its potential returns per unit of risk. MicroSectors Gold Miners is currently generating about -0.06 per unit of risk. If you would invest  2,601  in Xtrackers RREEF Global on September 15, 2024 and sell it today you would lose (94.00) from holding Xtrackers RREEF Global or give up 3.61% of portfolio value over 90 days.

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

Xtrackers RREEF Global  vs.  MicroSectors Gold Miners

Xtrackers RREEF Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers RREEF Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Xtrackers RREEF is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

MicroSectors Gold Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroSectors Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Xtrackers RREEF and MicroSectors Gold

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

The idea behind Xtrackers RREEF Global and MicroSectors Gold Miners 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.