Correlation Between Xtrackers ShortDAX and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and WisdomTree Japan 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 WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX Daily and WisdomTree Japan Equity, you can compare the effects of market volatilities on Xtrackers ShortDAX and WisdomTree Japan 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 WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and WisdomTree Japan.
Diversification Opportunities for Xtrackers ShortDAX and WisdomTree Japan
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and WisdomTree is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and WisdomTree Japan Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Equity 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 Daily are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Equity has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and WisdomTree Japan
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the WisdomTree Japan. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX Daily is 1.94 times less risky than WisdomTree Japan. The etf trades about -0.05 of its potential returns per unit of risk. The WisdomTree Japan Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,406 in WisdomTree Japan Equity on August 31, 2024 and sell it today you would earn a total of 900.00 from holding WisdomTree Japan Equity or generate 37.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.53% |
| Values | Daily Returns |
Xtrackers ShortDAX Daily vs. WisdomTree Japan Equity
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| WisdomTree Japan Equity |
Xtrackers ShortDAX and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and WisdomTree Japan
The main advantage of trading using opposite Xtrackers ShortDAX and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, WisdomTree Japan 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 WisdomTree Japan will offset losses from the drop in WisdomTree Japan's long position.| Xtrackers ShortDAX vs. Xtrackers MSCI USA | Xtrackers ShortDAX vs. Xtrackers USD Corporate | Xtrackers ShortDAX vs. Xtrackers MSCI AC | Xtrackers ShortDAX vs. Xtrackers MSCI World |
| WisdomTree Japan vs. iShares Core SP | WisdomTree Japan vs. iShares Core MSCI | WisdomTree Japan vs. Lyxor UCITS Stoxx |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Transaction History View history of all your transactions and understand their impact on performance |