Correlation Between Xtrackers ShortDAX and 3M
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and 3M 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 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and 3M Company, you can compare the effects of market volatilities on Xtrackers ShortDAX and 3M 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 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and 3M.
Diversification Opportunities for Xtrackers ShortDAX and 3M
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and 3M is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company 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 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and 3M go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and 3M
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the 3M. In addition to that, Xtrackers ShortDAX is 1.17 times more volatile than 3M Company. It trades about -0.31 of its total potential returns per unit of risk. 3M Company is currently generating about 0.2 per unit of volatility. If you would invest 12,238 in 3M Company on November 18, 2024 and sell it today you would earn a total of 1,906 from holding 3M Company or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.44% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. 3M Company
Performance |
| Timeline |
| Xtrackers ShortDAX |
| 3M Company |
Xtrackers ShortDAX and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and 3M
The main advantage of trading using opposite Xtrackers ShortDAX and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M'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 |
| 3M vs. DAIRY FARM INTL | 3M vs. INTERSHOP Communications Aktiengesellschaft | 3M vs. Penta Ocean Construction Co | 3M vs. Sumitomo Mitsui Construction |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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