Correlation Between Xtrackers ShortDAX and CME
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and CME 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 CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and CME Group, you can compare the effects of market volatilities on Xtrackers ShortDAX and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and CME.
Diversification Opportunities for Xtrackers ShortDAX and CME
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and CME is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and CME go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and CME
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the CME. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.02 times less risky than CME. The etf trades about -0.12 of its potential returns per unit of risk. The CME Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 20,397 in CME Group on September 13, 2024 and sell it today you would earn a total of 2,303 from holding CME Group or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. CME Group
Performance |
| Timeline |
| Xtrackers ShortDAX |
| CME Group |
Xtrackers ShortDAX and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and CME
The main advantage of trading using opposite Xtrackers ShortDAX and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Xtrackers ShortDAX vs. UBS Fund Solutions | Xtrackers ShortDAX vs. Xtrackers II | Xtrackers ShortDAX vs. Xtrackers Nikkei 225 | Xtrackers ShortDAX vs. iShares VII PLC |
| CME vs. Playa Hotels Resorts | CME vs. JD SPORTS FASH | CME vs. PLAYSTUDIOS A DL 0001 | CME vs. ANTA SPORTS PRODUCT |
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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