Correlation Between Xtrackers ShortDAX and New Residential
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and New Residential 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 ShortDAX and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and New Residential Investment, you can compare the effects of market volatilities on Xtrackers ShortDAX and New Residential 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 ShortDAX with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and New Residential.
Diversification Opportunities for Xtrackers ShortDAX and New Residential
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xtrackers and New is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and Xtrackers ShortDAX 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 ShortDAX are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and New Residential go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and New Residential
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 1.49 times less return on investment than New Residential. In addition to that, Xtrackers ShortDAX is 1.3 times more volatile than New Residential Investment. It trades about 0.12 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.23 per unit of volatility. If you would invest 973.00 in New Residential Investment on August 25, 2024 and sell it today you would earn a total of 55.00 from holding New Residential Investment or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. New Residential Investment
Performance |
| Timeline |
| Xtrackers ShortDAX |
| New Residential Inve |
Xtrackers ShortDAX and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and New Residential
The main advantage of trading using opposite Xtrackers ShortDAX and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
| New Residential vs. Xtrackers ShortDAX | New Residential vs. Xtrackers LevDAX | New Residential vs. Lyxor 1 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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