Correlation Between Xtrackers ShortDAX and IShares FTSE
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and IShares FTSE 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 IShares FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and iShares FTSE MIB, you can compare the effects of market volatilities on Xtrackers ShortDAX and IShares FTSE 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 IShares FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and IShares FTSE.
Diversification Opportunities for Xtrackers ShortDAX and IShares FTSE
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and iShares FTSE MIB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares FTSE MIB 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 IShares FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares FTSE MIB has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and IShares FTSE go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and IShares FTSE
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 1.75 times more return on investment than IShares FTSE. However, Xtrackers ShortDAX is 1.75 times more volatile than iShares FTSE MIB. It trades about 0.08 of its potential returns per unit of risk. iShares FTSE MIB is currently generating about -0.21 per unit of risk. If you would invest 82.00 in Xtrackers ShortDAX on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Xtrackers ShortDAX or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. iShares FTSE MIB
Performance |
| Timeline |
| Xtrackers ShortDAX |
| iShares FTSE MIB |
Xtrackers ShortDAX and IShares FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and IShares FTSE
The main advantage of trading using opposite Xtrackers ShortDAX and IShares FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, IShares FTSE 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 IShares FTSE will offset losses from the drop in IShares FTSE'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 |
| IShares FTSE vs. iShares Govt Bond | IShares FTSE vs. iShares Global AAA AA | IShares FTSE vs. iShares Smart City | IShares FTSE vs. iShares Broad High |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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