Correlation Between Xtrackers ShortDAX and STRAX AB
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and STRAX AB 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 STRAX AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and STRAX AB SK, you can compare the effects of market volatilities on Xtrackers ShortDAX and STRAX AB 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 STRAX AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and STRAX AB.
Diversification Opportunities for Xtrackers ShortDAX and STRAX AB
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and STRAX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and STRAX AB SK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAX AB SK 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 STRAX AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAX AB SK has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and STRAX AB go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and STRAX AB
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 0.11 times more return on investment than STRAX AB. However, Xtrackers ShortDAX is 9.22 times less risky than STRAX AB. It trades about -0.16 of its potential returns per unit of risk. STRAX AB SK is currently generating about -0.03 per unit of risk. If you would invest 83.00 in Xtrackers ShortDAX on October 24, 2024 and sell it today you would lose (11.00) from holding Xtrackers ShortDAX or give up 13.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. STRAX AB SK
Performance |
| Timeline |
| Xtrackers ShortDAX |
| STRAX AB SK |
Xtrackers ShortDAX and STRAX AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and STRAX AB
The main advantage of trading using opposite Xtrackers ShortDAX and STRAX AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, STRAX AB 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 STRAX AB will offset losses from the drop in STRAX AB'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 |
| STRAX AB vs. TYSON FOODS A | STRAX AB vs. Mitsui Chemicals | STRAX AB vs. US FOODS HOLDING | STRAX AB vs. KINGBOARD CHEMICAL |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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