Correlation Between Xtrackers LevDAX and NVIDIA

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

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

Diversification Opportunities for Xtrackers LevDAX and NVIDIA

0.79

Correlation Coefficient

Xtrackers LevDAX  NVIDIA

Poor diversification

The 3 months correlation between Xtrackers and NVIDIA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and NVIDIA go up and down completely randomly.

Pair Corralation between Xtrackers LevDAX and NVIDIA

Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.6 times more return on investment than NVIDIA. However, Xtrackers LevDAX is 1.67 times less risky than NVIDIA. It trades about 0.1 of its potential returns per unit of risk. NVIDIA is currently generating about 0.04 per unit of risk. If you would invest  17,256  in Xtrackers LevDAX on April 21, 2025 and sell it today you would earn a total of  11,129  from holding Xtrackers LevDAX or generate 64.49% 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.  NVIDIA

Xtrackers LevDAX

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 17 (%) 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.

NVIDIA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NVIDIA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers LevDAX and NVIDIA

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

The idea behind Xtrackers LevDAX and NVIDIA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.