Correlation Between Xtrackers ShortDAX and IShares Edge
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and IShares Edge 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 IShares Edge 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 iShares Edge MSCI, you can compare the effects of market volatilities on Xtrackers ShortDAX and IShares Edge 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 IShares Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and IShares Edge.
Diversification Opportunities for Xtrackers ShortDAX and IShares Edge
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and IShares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and iShares Edge MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge MSCI 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 IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge MSCI has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and IShares Edge go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and IShares Edge
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the IShares Edge. In addition to that, Xtrackers ShortDAX is 2.35 times more volatile than iShares Edge MSCI. It trades about -0.31 of its total potential returns per unit of risk. iShares Edge MSCI is currently generating about 0.07 per unit of volatility. If you would invest 754.00 in iShares Edge MSCI on November 28, 2024 and sell it today you would earn a total of 4.00 from holding iShares Edge MSCI or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX Daily vs. iShares Edge MSCI
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| iShares Edge MSCI |
Xtrackers ShortDAX and IShares Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and IShares Edge
The main advantage of trading using opposite Xtrackers ShortDAX and IShares Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, IShares Edge 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 IShares Edge will offset losses from the drop in IShares Edge's long position.| Xtrackers ShortDAX vs. UBSFund Solutions MSCI | Xtrackers ShortDAX vs. Vanguard SP 500 | Xtrackers ShortDAX vs. iShares VII PLC | Xtrackers ShortDAX vs. iShares Core SP |
| IShares Edge vs. iShares Corp Bond | IShares Edge vs. iShares Emerging Asia | IShares Edge vs. iShares MSCI Global | IShares Edge vs. iShares VII PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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