Correlation Between Xtrackers ShortDAX and Bank of America
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Bank of America, you can compare the effects of market volatilities on Xtrackers ShortDAX and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Bank of America.
Diversification Opportunities for Xtrackers ShortDAX and Bank of America
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Bank is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Bank of America go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Bank of America
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Bank of America. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.54 times less risky than Bank of America. The etf trades about -0.07 of its potential returns per unit of risk. The Bank of America is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,877 in Bank of America on September 1, 2024 and sell it today you would earn a total of 657.00 from holding Bank of America or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Bank of America
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Bank of America |
Xtrackers ShortDAX and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Bank of America
The main advantage of trading using opposite Xtrackers ShortDAX and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America'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 |
| Bank of America vs. PRECISION DRILLING P | Bank of America vs. Insurance Australia Group | Bank of America vs. United Insurance Holdings | Bank of America vs. SBI Insurance Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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