Correlation Between Xtrackers ShortDAX and PAX GLOBAL
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and PAX GLOBAL 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 PAX GLOBAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and PAX GLOBAL TECH, you can compare the effects of market volatilities on Xtrackers ShortDAX and PAX GLOBAL 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 PAX GLOBAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and PAX GLOBAL.
Diversification Opportunities for Xtrackers ShortDAX and PAX GLOBAL
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and PAX is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and PAX GLOBAL TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAX GLOBAL TECH 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 PAX GLOBAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAX GLOBAL TECH has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and PAX GLOBAL go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and PAX GLOBAL
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the PAX GLOBAL. In addition to that, Xtrackers ShortDAX is 1.11 times more volatile than PAX GLOBAL TECH. It trades about -0.14 of its total potential returns per unit of risk. PAX GLOBAL TECH is currently generating about 0.24 per unit of volatility. If you would invest 59.00 in PAX GLOBAL TECH on September 3, 2024 and sell it today you would earn a total of 4.00 from holding PAX GLOBAL TECH or generate 6.78% 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. PAX GLOBAL TECH
Performance |
| Timeline |
| Xtrackers ShortDAX |
| PAX GLOBAL TECH |
Xtrackers ShortDAX and PAX GLOBAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and PAX GLOBAL
The main advantage of trading using opposite Xtrackers ShortDAX and PAX GLOBAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, PAX GLOBAL 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 PAX GLOBAL will offset losses from the drop in PAX GLOBAL'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 |
| PAX GLOBAL vs. National Health Investors | PAX GLOBAL vs. SMA Solar Technology | PAX GLOBAL vs. Waste Management | PAX GLOBAL vs. CEOTRONICS |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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