Correlation Between Xtrackers ShortDAX and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and MGIC Investment 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 MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and MGIC Investment, you can compare the effects of market volatilities on Xtrackers ShortDAX and MGIC Investment 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 MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and MGIC Investment.
Diversification Opportunities for Xtrackers ShortDAX and MGIC Investment
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and MGIC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and MGIC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment 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 MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and MGIC Investment go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and MGIC Investment
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the MGIC Investment. In addition to that, Xtrackers ShortDAX is 1.07 times more volatile than MGIC Investment. It trades about -0.08 of its total potential returns per unit of risk. MGIC Investment is currently generating about 0.1 per unit of volatility. If you would invest 1,689 in MGIC Investment on September 14, 2024 and sell it today you would earn a total of 651.00 from holding MGIC Investment or generate 38.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. MGIC Investment
Performance |
| Timeline |
| Xtrackers ShortDAX |
| MGIC Investment |
Xtrackers ShortDAX and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and MGIC Investment
The main advantage of trading using opposite Xtrackers ShortDAX and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment'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 |
| MGIC Investment vs. MELIA HOTELS | MGIC Investment vs. Xenia Hotels Resorts | MGIC Investment vs. Host Hotels Resorts | MGIC Investment vs. Park Hotels Resorts |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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