Correlation Between Xtrackers ShortDAX and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Hong Kong 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 Hong Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Hong Kong Exchanges, you can compare the effects of market volatilities on Xtrackers ShortDAX and Hong Kong 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 Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Hong Kong.
Diversification Opportunities for Xtrackers ShortDAX and Hong Kong
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and Hong is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Hong Kong Exchanges in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong Exchanges 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong Exchanges has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Hong Kong go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Hong Kong
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Hong Kong. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.74 times less risky than Hong Kong. The etf trades about -0.06 of its potential returns per unit of risk. The Hong Kong Exchanges is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,363 in Hong Kong Exchanges on September 4, 2024 and sell it today you would earn a total of 1,173 from holding Hong Kong Exchanges or generate 49.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Hong Kong Exchanges
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Hong Kong Exchanges |
Xtrackers ShortDAX and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Hong Kong
The main advantage of trading using opposite Xtrackers ShortDAX and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Hong Kong 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 Hong Kong will offset losses from the drop in Hong Kong'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 |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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