Correlation Between Xtrackers ShortDAX and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Carpenter Technology 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 Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Carpenter Technology, you can compare the effects of market volatilities on Xtrackers ShortDAX and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Carpenter Technology.
Diversification Opportunities for Xtrackers ShortDAX and Carpenter Technology
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Carpenter is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Carpenter Technology go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Carpenter Technology
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Carpenter Technology. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.91 times less risky than Carpenter Technology. The etf trades about -0.02 of its potential returns per unit of risk. The Carpenter Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 10,270 in Carpenter Technology on August 28, 2024 and sell it today you would earn a total of 7,930 from holding Carpenter Technology or generate 77.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Carpenter Technology
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Carpenter Technology |
Xtrackers ShortDAX and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Carpenter Technology
The main advantage of trading using opposite Xtrackers ShortDAX and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology'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 |
| Carpenter Technology vs. SERI INDUSTRIAL EO | Carpenter Technology vs. KENNAMETAL INC | Carpenter Technology vs. Jacquet Metal Service | Carpenter Technology vs. SLR Investment Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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