Correlation Between Xtrackers ShortDAX and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and BNP Paribas 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 BNP Paribas 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 BNP Paribas Easy, you can compare the effects of market volatilities on Xtrackers ShortDAX and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and BNP Paribas.
Diversification Opportunities for Xtrackers ShortDAX and BNP Paribas
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and BNP is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and BNP Paribas go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and BNP Paribas
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to generate 1.23 times more return on investment than BNP Paribas. However, Xtrackers ShortDAX is 1.23 times more volatile than BNP Paribas Easy. It trades about 0.01 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.12 per unit of risk. If you would invest 1,076 in Xtrackers ShortDAX Daily on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Xtrackers ShortDAX Daily or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX Daily vs. BNP Paribas Easy
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| BNP Paribas Easy |
Xtrackers ShortDAX and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and BNP Paribas
The main advantage of trading using opposite Xtrackers ShortDAX and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' 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 |
| BNP Paribas vs. UBSFund Solutions MSCI | BNP Paribas vs. iShares Core SP | BNP Paribas vs. iShares Core MSCI | BNP Paribas 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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