Correlation Between Xtrackers ShortDAX and PT Bumi
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and PT Bumi 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 PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and PT Bumi Resources, you can compare the effects of market volatilities on Xtrackers ShortDAX and PT Bumi 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 PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and PT Bumi.
Diversification Opportunities for Xtrackers ShortDAX and PT Bumi
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and PJM is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources 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 PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and PT Bumi go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and PT Bumi
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the PT Bumi. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 4.14 times less risky than PT Bumi. The etf trades about -0.05 of its potential returns per unit of risk. The PT Bumi Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.95 in PT Bumi Resources on September 3, 2024 and sell it today you would lose (0.15) from holding PT Bumi Resources or give up 15.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. PT Bumi Resources
Performance |
| Timeline |
| Xtrackers ShortDAX |
| PT Bumi Resources |
Xtrackers ShortDAX and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and PT Bumi
The main advantage of trading using opposite Xtrackers ShortDAX and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi'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 |
| PT Bumi vs. National Health Investors | PT Bumi vs. Bumrungrad Hospital Public | PT Bumi vs. SMA Solar Technology | PT Bumi vs. MACOM Technology Solutions |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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