Correlation Between Xtrackers ShortDAX and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and PIMCO Short 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 PIMCO Short 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 PIMCO Short Term High, you can compare the effects of market volatilities on Xtrackers ShortDAX and PIMCO Short 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 PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and PIMCO Short.
Diversification Opportunities for Xtrackers ShortDAX and PIMCO Short
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and PIMCO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term 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 PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and PIMCO Short go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and PIMCO Short
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the PIMCO Short. In addition to that, Xtrackers ShortDAX is 3.53 times more volatile than PIMCO Short Term High. It trades about -0.15 of its total potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.17 per unit of volatility. If you would invest 11,800 in PIMCO Short Term High on September 1, 2024 and sell it today you would earn a total of 100.00 from holding PIMCO Short Term High or generate 0.85% 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. PIMCO Short Term High
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| PIMCO Short Term |
Xtrackers ShortDAX and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and PIMCO Short
The main advantage of trading using opposite Xtrackers ShortDAX and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, PIMCO Short 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 PIMCO Short will offset losses from the drop in PIMCO Short'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 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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