Correlation Between HANetf ICAV and Xtrackers

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

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

Diversification Opportunities for HANetf ICAV and Xtrackers

-0.14

Correlation Coefficient

HANetf ICAV  Xtrackers

Good diversification

The 3 months correlation between HANetf and Xtrackers is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding HANetf ICAV and Xtrackers II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers II and HANetf ICAV 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 HANetf ICAV 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 has no effect on the direction of HANetf ICAV i.e., HANetf ICAV and Xtrackers go up and down completely randomly.

Pair Corralation between HANetf ICAV and Xtrackers

Assuming the 90 days trading horizon HANetf ICAV is expected to generate 1.95 times more return on investment than Xtrackers. However, HANetf ICAV is 1.95 times more volatile than Xtrackers II . It trades about 0.15 of its potential returns per unit of risk. Xtrackers II is currently generating about -0.05 per unit of risk. If you would invest  1,215  in HANetf ICAV on September 26, 2024 and sell it today you would earn a total of  193.00  from holding HANetf ICAV or generate 15.88% return on investment over 90 days.

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

HANetf ICAV   vs.  Xtrackers II

HANetf ICAV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, HANetf ICAV reported solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HANetf ICAV and Xtrackers

The main advantage of trading using opposite HANetf ICAV and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HANetf ICAV 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 HANetf ICAV and Xtrackers II 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.