Correlation Between Xtrackers ShortDAX and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Granite Construction, you can compare the effects of market volatilities on Xtrackers ShortDAX and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Granite Construction.
Diversification Opportunities for Xtrackers ShortDAX and Granite Construction
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Granite is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Granite Construction go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Granite Construction
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 8.53 times less return on investment than Granite Construction. But when comparing it to its historical volatility, Xtrackers ShortDAX is 1.8 times less risky than Granite Construction. It trades about 0.08 of its potential returns per unit of risk. Granite Construction is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 7,600 in Granite Construction on August 28, 2024 and sell it today you would earn a total of 1,850 from holding Granite Construction or generate 24.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Granite Construction
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Granite Construction |
Xtrackers ShortDAX and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Granite Construction
The main advantage of trading using opposite Xtrackers ShortDAX and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction'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 |
| Granite Construction vs. Flutter Entertainment PLC | Granite Construction vs. Townsquare Media | Granite Construction vs. Hollywood Bowl Group | Granite Construction vs. Caseys General Stores |
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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