Correlation Between Xtrackers ShortDAX and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and EOG Resources 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 EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and EOG Resources, you can compare the effects of market volatilities on Xtrackers ShortDAX and EOG Resources 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 EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and EOG Resources.
Diversification Opportunities for Xtrackers ShortDAX and EOG Resources
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and EOG is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources 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 EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and EOG Resources go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and EOG Resources
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the EOG Resources. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.04 times less risky than EOG Resources. The etf trades about -0.06 of its potential returns per unit of risk. The EOG Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 10,788 in EOG Resources on August 27, 2024 and sell it today you would earn a total of 2,278 from holding EOG Resources or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. EOG Resources
Performance |
| Timeline |
| Xtrackers ShortDAX |
| EOG Resources |
Xtrackers ShortDAX and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and EOG Resources
The main advantage of trading using opposite Xtrackers ShortDAX and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, EOG Resources 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 EOG Resources will offset losses from the drop in EOG Resources' long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
| EOG Resources vs. Canadian Natural Resources | EOG Resources vs. Pioneer Natural Resources | EOG Resources vs. Woodside Energy Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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