Correlation Between Xtrackers ShortDAX and Carsales
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Carsales 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 Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Carsales, you can compare the effects of market volatilities on Xtrackers ShortDAX and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Carsales.
Diversification Opportunities for Xtrackers ShortDAX and Carsales
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Carsales is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Carsales go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Carsales
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 53.7 times less return on investment than Carsales. In addition to that, Xtrackers ShortDAX is 1.04 times more volatile than Carsales. It trades about 0.01 of its total potential returns per unit of risk. Carsales is currently generating about 0.39 per unit of volatility. If you would invest 2,280 in Carsales on August 31, 2024 and sell it today you would earn a total of 280.00 from holding Carsales or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Carsales
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Carsales |
Xtrackers ShortDAX and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Carsales
The main advantage of trading using opposite Xtrackers ShortDAX and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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