Correlation Between Xtrackers ShortDAX and ImagineAR
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and ImagineAR 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 ImagineAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and ImagineAR, you can compare the effects of market volatilities on Xtrackers ShortDAX and ImagineAR 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 ImagineAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and ImagineAR.
Diversification Opportunities for Xtrackers ShortDAX and ImagineAR
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and ImagineAR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and ImagineAR go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and ImagineAR
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the ImagineAR. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 9.33 times less risky than ImagineAR. The etf trades about -0.33 of its potential returns per unit of risk. The ImagineAR is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 7.15 in ImagineAR on October 26, 2024 and sell it today you would lose (2.30) from holding ImagineAR or give up 32.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.5% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. ImagineAR
Performance |
| Timeline |
| Xtrackers ShortDAX |
| ImagineAR |
Xtrackers ShortDAX and ImagineAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and ImagineAR
The main advantage of trading using opposite Xtrackers ShortDAX and ImagineAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, ImagineAR 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 ImagineAR will offset losses from the drop in ImagineAR'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 |
| ImagineAR vs. Titan Machinery | ImagineAR vs. ELL ENVIRONHLDGS HD 0001 | ImagineAR vs. MOUNT GIBSON IRON | ImagineAR vs. AUST AGRICULTURAL |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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