Correlation Between Xtrackers ShortDAX and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI USA, you can compare the effects of market volatilities on Xtrackers ShortDAX and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Xtrackers MSCI.
Diversification Opportunities for Xtrackers ShortDAX and Xtrackers MSCI
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xtrackers and Xtrackers is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and Xtrackers MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI USA 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI USA has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Xtrackers MSCI
Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the Xtrackers MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX Daily is 1.42 times less risky than Xtrackers MSCI. The etf trades about -0.05 of its potential returns per unit of risk. The Xtrackers MSCI USA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 12,172 in Xtrackers MSCI USA on August 31, 2024 and sell it today you would earn a total of 3,334 from holding Xtrackers MSCI USA or generate 27.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX Daily vs. Xtrackers MSCI USA
Performance |
| Timeline |
| Xtrackers ShortDAX Daily |
| Xtrackers MSCI USA |
Xtrackers ShortDAX and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Xtrackers MSCI
The main advantage of trading using opposite Xtrackers ShortDAX and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI'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 |
| Xtrackers MSCI vs. Xtrackers MSCI USA | Xtrackers MSCI vs. Xtrackers USD Corporate | Xtrackers MSCI vs. Xtrackers MSCI AC | Xtrackers MSCI 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 Stocks Directory module to find actively traded stocks across global markets.
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