Correlation Between Xtrackers ShortDAX and POWER METALS
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and POWER METALS 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 POWER METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and POWER METALS, you can compare the effects of market volatilities on Xtrackers ShortDAX and POWER METALS 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 POWER METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and POWER METALS.
Diversification Opportunities for Xtrackers ShortDAX and POWER METALS
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and POWER is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and POWER METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWER METALS 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 POWER METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWER METALS has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and POWER METALS go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and POWER METALS
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the POWER METALS. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 3.29 times less risky than POWER METALS. The etf trades about -0.06 of its potential returns per unit of risk. The POWER METALS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 19.00 in POWER METALS on September 3, 2024 and sell it today you would earn a total of 6.00 from holding POWER METALS or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. POWER METALS
Performance |
| Timeline |
| Xtrackers ShortDAX |
| POWER METALS |
Xtrackers ShortDAX and POWER METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and POWER METALS
The main advantage of trading using opposite Xtrackers ShortDAX and POWER METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, POWER METALS 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 POWER METALS will offset losses from the drop in POWER METALS'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 |
| POWER METALS vs. HANOVER INSURANCE | POWER METALS vs. Ping An Insurance | POWER METALS vs. REVO INSURANCE SPA | POWER METALS vs. RETAIL FOOD 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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