Correlation Between Xtrackers ShortDAX and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Eagle Materials 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 Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Eagle Materials, you can compare the effects of market volatilities on Xtrackers ShortDAX and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Eagle Materials.
Diversification Opportunities for Xtrackers ShortDAX and Eagle Materials
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Eagle is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Eagle Materials go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Eagle Materials
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Eagle Materials. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.21 times less risky than Eagle Materials. The etf trades about -0.06 of its potential returns per unit of risk. The Eagle Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,353 in Eagle Materials on August 29, 2024 and sell it today you would earn a total of 17,247 from holding Eagle Materials or generate 139.62% 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. Eagle Materials
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Eagle Materials |
Xtrackers ShortDAX and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Eagle Materials
The main advantage of trading using opposite Xtrackers ShortDAX and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
| Eagle Materials vs. Daikin IndustriesLtd | Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Anhui Conch Cement | Eagle Materials vs. Superior Plus Corp |
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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