Correlation Between Xtrackers LevDAX and Jerónimo Martins

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

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

Diversification Opportunities for Xtrackers LevDAX and Jerónimo Martins

0.68

Correlation Coefficient

Xtrackers LevDAX  Jerónimo Martins

Poor diversification

The 3 months correlation between Xtrackers and Jerónimo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Jernimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jernimo Martins SGPS 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 Jerónimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jernimo Martins SGPS has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Jerónimo Martins go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and Jerónimo Martins

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.22 times more return on investment than Jerónimo Martins. However, Xtrackers LevDAX is 1.22 times more volatile than Jernimo Martins SGPS. It trades about 0.18 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about 0.05 per unit of risk. If you would invest  23,765  in Xtrackers LevDAX on April 24, 2025 and sell it today you would earn a total of  4,570  from holding Xtrackers LevDAX or generate 19.23% 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.  Jernimo Martins SGPS

Xtrackers LevDAX

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 13 (%) 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.

Jernimo Martins SGPS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jernimo Martins SGPS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jerónimo Martins is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers LevDAX and Jerónimo Martins

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

The idea behind Xtrackers LevDAX and Jernimo Martins SGPS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.