Correlation Between Xtrackers ShortDAX and IShares EURO
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and IShares EURO 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 EURO 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 EURO STOXX, you can compare the effects of market volatilities on Xtrackers ShortDAX and IShares EURO 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 EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and IShares EURO.
Diversification Opportunities for Xtrackers ShortDAX and IShares EURO
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and IShares is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and iShares EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares EURO STOXX 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 EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares EURO STOXX has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and IShares EURO go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and IShares EURO
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the IShares EURO. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX Daily is 1.63 times less risky than IShares EURO. The etf trades about -0.05 of its potential returns per unit of risk. The iShares EURO STOXX is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,044 in iShares EURO STOXX on August 31, 2024 and sell it today you would earn a total of 291.00 from holding iShares EURO STOXX or generate 27.87% 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 EURO STOXX
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| iShares EURO STOXX |
Xtrackers ShortDAX and IShares EURO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and IShares EURO
The main advantage of trading using opposite Xtrackers ShortDAX and IShares EURO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, IShares EURO 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 EURO will offset losses from the drop in IShares EURO'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 |
| IShares EURO vs. iShares Core SP | IShares EURO vs. iShares Core MSCI | IShares EURO 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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