Correlation Between Xtrackers ShortDAX and HSBC EMERGING
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and HSBC EMERGING 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 HSBC EMERGING 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 HSBC EMERGING MARKET, you can compare the effects of market volatilities on Xtrackers ShortDAX and HSBC EMERGING 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 HSBC EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and HSBC EMERGING.
Diversification Opportunities for Xtrackers ShortDAX and HSBC EMERGING
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and HSBC is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and HSBC EMERGING MARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC EMERGING MARKET 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 HSBC EMERGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC EMERGING MARKET has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and HSBC EMERGING go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and HSBC EMERGING
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to generate 0.66 times more return on investment than HSBC EMERGING. However, Xtrackers ShortDAX Daily is 1.52 times less risky than HSBC EMERGING. It trades about -0.15 of its potential returns per unit of risk. HSBC EMERGING MARKET is currently generating about -0.12 per unit of risk. If you would invest 1,103 in Xtrackers ShortDAX Daily on September 1, 2024 and sell it today you would lose (28.00) from holding Xtrackers ShortDAX Daily or give up 2.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX Daily vs. HSBC EMERGING MARKET
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| HSBC EMERGING MARKET |
Xtrackers ShortDAX and HSBC EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and HSBC EMERGING
The main advantage of trading using opposite Xtrackers ShortDAX and HSBC EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, HSBC EMERGING 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 HSBC EMERGING will offset losses from the drop in HSBC EMERGING'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 |
| HSBC EMERGING vs. iShares Core SP | HSBC EMERGING vs. iShares Core MSCI | HSBC EMERGING 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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