Correlation Between Xtrackers ShortDAX and VALE N1
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and VALE N1 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 VALE N1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and VALE N1, you can compare the effects of market volatilities on Xtrackers ShortDAX and VALE N1 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 VALE N1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and VALE N1.
Diversification Opportunities for Xtrackers ShortDAX and VALE N1
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and VALE is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and VALE N1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VALE N1 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 VALE N1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VALE N1 has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and VALE N1 go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and VALE N1
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the VALE N1. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.56 times less risky than VALE N1. The etf trades about -0.06 of its potential returns per unit of risk. The VALE N1 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 853.00 in VALE N1 on August 26, 2024 and sell it today you would earn a total of 132.00 from holding VALE N1 or generate 15.47% 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. VALE N1
Performance |
| Timeline |
| Xtrackers ShortDAX |
| VALE N1 |
Xtrackers ShortDAX and VALE N1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and VALE N1
The main advantage of trading using opposite Xtrackers ShortDAX and VALE N1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, VALE N1 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 VALE N1 will offset losses from the drop in VALE N1'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 |
| VALE N1 vs. SEKISUI CHEMICAL | VALE N1 vs. Materialise NV | VALE N1 vs. CHEMICAL INDUSTRIES | VALE N1 vs. China BlueChemical |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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