Correlation Between Xtrackers ShortDAX and Microsoft
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Microsoft, you can compare the effects of market volatilities on Xtrackers ShortDAX and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Microsoft.
Diversification Opportunities for Xtrackers ShortDAX and Microsoft
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Microsoft is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Microsoft go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Microsoft
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Microsoft. In addition to that, Xtrackers ShortDAX is 1.19 times more volatile than Microsoft. It trades about -0.06 of its total potential returns per unit of risk. Microsoft is currently generating about 0.04 per unit of volatility. If you would invest 36,580 in Microsoft on August 28, 2024 and sell it today you would earn a total of 3,350 from holding Microsoft or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.53% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Microsoft
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Microsoft |
Xtrackers ShortDAX and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Microsoft
The main advantage of trading using opposite Xtrackers ShortDAX and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft'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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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