Correlation Between Xtrackers ShortDAX and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Illinois Tool 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 Illinois Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Illinois Tool Works, you can compare the effects of market volatilities on Xtrackers ShortDAX and Illinois Tool 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 Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Illinois Tool.
Diversification Opportunities for Xtrackers ShortDAX and Illinois Tool
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Illinois is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works 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 Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Illinois Tool go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Illinois Tool
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Illinois Tool. In addition to that, Xtrackers ShortDAX is 1.37 times more volatile than Illinois Tool Works. It trades about -0.06 of its total potential returns per unit of risk. Illinois Tool Works is currently generating about 0.05 per unit of volatility. If you would invest 19,909 in Illinois Tool Works on August 29, 2024 and sell it today you would earn a total of 6,421 from holding Illinois Tool Works or generate 32.25% 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. Illinois Tool Works
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Illinois Tool Works |
Xtrackers ShortDAX and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Illinois Tool
The main advantage of trading using opposite Xtrackers ShortDAX and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool'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 |
| Illinois Tool vs. Superior Plus Corp | Illinois Tool vs. NMI Holdings | Illinois Tool vs. Origin Agritech | Illinois Tool vs. SIVERS SEMICONDUCTORS AB |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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