Correlation Between Xtrackers ShortDAX and METHODE ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and METHODE ELECTRONICS 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 METHODE ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and METHODE ELECTRONICS, you can compare the effects of market volatilities on Xtrackers ShortDAX and METHODE ELECTRONICS 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 METHODE ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and METHODE ELECTRONICS.
Diversification Opportunities for Xtrackers ShortDAX and METHODE ELECTRONICS
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and METHODE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and METHODE ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METHODE ELECTRONICS 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 METHODE ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METHODE ELECTRONICS has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and METHODE ELECTRONICS go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and METHODE ELECTRONICS
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 7.87 times less return on investment than METHODE ELECTRONICS. But when comparing it to its historical volatility, Xtrackers ShortDAX is 2.92 times less risky than METHODE ELECTRONICS. It trades about 0.08 of its potential returns per unit of risk. METHODE ELECTRONICS is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 870.00 in METHODE ELECTRONICS on August 27, 2024 and sell it today you would earn a total of 180.00 from holding METHODE ELECTRONICS or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. METHODE ELECTRONICS
Performance |
| Timeline |
| Xtrackers ShortDAX |
| METHODE ELECTRONICS |
Xtrackers ShortDAX and METHODE ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and METHODE ELECTRONICS
The main advantage of trading using opposite Xtrackers ShortDAX and METHODE ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, METHODE ELECTRONICS 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 METHODE ELECTRONICS will offset losses from the drop in METHODE ELECTRONICS'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 |
| METHODE ELECTRONICS vs. Autohome ADR | METHODE ELECTRONICS vs. Haier Smart Home | METHODE ELECTRONICS vs. Chongqing Machinery Electric | METHODE ELECTRONICS vs. The Home Depot |
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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