Correlation Between T Rex and DTRGR

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

By analyzing existing cross correlation between T Rex 2X Long and DTRGR 52 17 JAN 25, you can compare the effects of market volatilities on T Rex and DTRGR 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 T Rex with a short position of DTRGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and DTRGR.

Diversification Opportunities for T Rex and DTRGR

0.69

Correlation Coefficient

T Rex  DTRGR

Poor diversification

The 3 months correlation between NVDX and DTRGR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and DTRGR 52 17 JAN 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTRGR 52 17 and T Rex 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 T Rex 2X Long are associated (or correlated) with DTRGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTRGR 52 17 has no effect on the direction of T Rex i.e., T Rex and DTRGR go up and down completely randomly.

Pair Corralation between T Rex and DTRGR

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the DTRGR. In addition to that, T Rex is 126.6 times more volatile than DTRGR 52 17 JAN 25. It trades about -0.12 of its total potential returns per unit of risk. DTRGR 52 17 JAN 25 is currently generating about 0.1 per unit of volatility. If you would invest  9,998  in DTRGR 52 17 JAN 25 on September 23, 2024 and sell it today you would earn a total of  4.00  from holding DTRGR 52 17 JAN 25 or generate 0.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	57.14%
Values	Daily Returns

T Rex 2X Long  vs.  DTRGR 52 17 JAN 25

T Rex 2X

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

DTRGR 52 17

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DTRGR 52 17 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DTRGR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Rex and DTRGR

The main advantage of trading using opposite T Rex and DTRGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, DTRGR 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 DTRGR will offset losses from the drop in DTRGR's long position.

The idea behind T Rex 2X Long and DTRGR 52 17 JAN 25 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.