Correlation Between Xtrackers ShortDAX and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Raytheon Technologies 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 Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Raytheon Technologies Corp, you can compare the effects of market volatilities on Xtrackers ShortDAX and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Raytheon Technologies.
Diversification Opportunities for Xtrackers ShortDAX and Raytheon Technologies
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Raytheon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Raytheon Technologies
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 0.92 times more return on investment than Raytheon Technologies. However, Xtrackers ShortDAX is 1.09 times less risky than Raytheon Technologies. It trades about 0.08 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.04 per unit of risk. If you would invest 82.00 in Xtrackers ShortDAX on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Xtrackers ShortDAX or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Raytheon Technologies |
Xtrackers ShortDAX and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Raytheon Technologies
The main advantage of trading using opposite Xtrackers ShortDAX and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
| Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. Airbus SE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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