Correlation Between Xtrackers ShortDAX and BASF SE
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and BASF SE 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 BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and BASF SE, you can compare the effects of market volatilities on Xtrackers ShortDAX and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and BASF SE.
Diversification Opportunities for Xtrackers ShortDAX and BASF SE
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and BASF is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and BASF SE go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and BASF SE
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 0.75 times more return on investment than BASF SE. However, Xtrackers ShortDAX is 1.33 times less risky than BASF SE. It trades about 0.12 of its potential returns per unit of risk. BASF SE is currently generating about -0.16 per unit of risk. If you would invest 83.00 in Xtrackers ShortDAX on August 25, 2024 and sell it today you would earn a total of 3.00 from holding Xtrackers ShortDAX or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. BASF SE
Performance |
| Timeline |
| Xtrackers ShortDAX |
| BASF SE |
Xtrackers ShortDAX and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and BASF SE
The main advantage of trading using opposite Xtrackers ShortDAX and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE'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 |
| BASF SE vs. North American Construction | BASF SE vs. WIMFARM SA EO | BASF SE vs. TITAN MACHINERY | BASF SE vs. Ming Le Sports |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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