Correlation Between Xtrackers LevDAX and JPM Eurozone

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Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and JPM Eurozone 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 JPM Eurozone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and JPM Eurozone Research, you can compare the effects of market volatilities on Xtrackers LevDAX and JPM Eurozone 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 JPM Eurozone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and JPM Eurozone.

Diversification Opportunities for Xtrackers LevDAX and JPM Eurozone

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Xtrackers and JPM is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and JPM Eurozone Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Eurozone Research 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 JPM Eurozone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Eurozone Research has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and JPM Eurozone go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and JPM Eurozone

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 2.37 times more return on investment than JPM Eurozone. However, Xtrackers LevDAX is 2.37 times more volatile than JPM Eurozone Research. It trades about 0.18 of its potential returns per unit of risk. JPM Eurozone Research is currently generating about 0.14 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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Xtrackers LevDAX  vs.  JPM Eurozone Research

 Performance 
       Timeline  
Xtrackers LevDAX 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
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.
JPM Eurozone Research 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in JPM Eurozone Research are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, JPM Eurozone may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Xtrackers LevDAX and JPM Eurozone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers LevDAX and JPM Eurozone

The main advantage of trading using opposite Xtrackers LevDAX and JPM Eurozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, JPM Eurozone 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 JPM Eurozone will offset losses from the drop in JPM Eurozone's long position.
The idea behind Xtrackers LevDAX and JPM Eurozone Research 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 CEOs Directory module to screen CEOs from public companies around the world.

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