Correlation Between Xtrackers ShortDAX and FirstGroup Plc
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and FirstGroup Plc 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 FirstGroup Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and FirstGroup plc, you can compare the effects of market volatilities on Xtrackers ShortDAX and FirstGroup Plc 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 FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and FirstGroup Plc.
Diversification Opportunities for Xtrackers ShortDAX and FirstGroup Plc
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and FirstGroup is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc 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 FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and FirstGroup Plc go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and FirstGroup Plc
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the FirstGroup Plc. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.18 times less risky than FirstGroup Plc. The etf trades about -0.06 of its potential returns per unit of risk. The FirstGroup plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 107.00 in FirstGroup plc on September 4, 2024 and sell it today you would earn a total of 75.00 from holding FirstGroup plc or generate 70.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. FirstGroup plc
Performance |
| Timeline |
| Xtrackers ShortDAX |
| FirstGroup plc |
Xtrackers ShortDAX and FirstGroup Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and FirstGroup Plc
The main advantage of trading using opposite Xtrackers ShortDAX and FirstGroup Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, FirstGroup Plc 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 FirstGroup Plc will offset losses from the drop in FirstGroup Plc'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 |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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