Correlation Between Xtrackers LevDAX and Fifth Third

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

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

Diversification Opportunities for Xtrackers LevDAX and Fifth Third

0.64

Correlation Coefficient

Xtrackers LevDAX  Fifth Third

Poor diversification

The 3 months correlation between Xtrackers and Fifth is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Fifth Third go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Fifth Third

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.04 times less return on investment than Fifth Third. In addition to that, Xtrackers LevDAX is 1.07 times more volatile than Fifth Third Bancorp. It trades about 0.19 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.21 per unit of volatility. If you would invest  3,026  in Fifth Third Bancorp on April 23, 2025 and sell it today you would earn a total of  680.00  from holding Fifth Third Bancorp or generate 22.47% return on investment over 90 days.

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

Xtrackers LevDAX  vs.  Fifth Third Bancorp

Xtrackers LevDAX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Xtrackers LevDAX reported solid returns over the last few months and may actually be approaching a breakup point.

Fifth Third Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fifth Third reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers LevDAX and Fifth Third

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

The idea behind Xtrackers LevDAX and Fifth Third Bancorp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.