Correlation Between SPDR SP and Xtrackers ShortDAX
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Xtrackers ShortDAX 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 SPDR SP and Xtrackers ShortDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Technology and Xtrackers ShortDAX, you can compare the effects of market volatilities on SPDR SP and Xtrackers ShortDAX 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 SPDR SP with a short position of Xtrackers ShortDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Xtrackers ShortDAX.
Diversification Opportunities for SPDR SP and Xtrackers ShortDAX
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and Xtrackers is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Technology and Xtrackers ShortDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ShortDAX and SPDR SP 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 SPDR SP Technology are associated (or correlated) with Xtrackers ShortDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ShortDAX has no effect on the direction of SPDR SP i.e., SPDR SP and Xtrackers ShortDAX go up and down completely randomly.
Pair Corralation between SPDR SP and Xtrackers ShortDAX
Assuming the 90 days trading horizon SPDR SP Technology is expected to generate 0.86 times more return on investment than Xtrackers ShortDAX. However, SPDR SP Technology is 1.16 times less risky than Xtrackers ShortDAX. It trades about 0.04 of its potential returns per unit of risk. Xtrackers ShortDAX is currently generating about -0.25 per unit of risk. If you would invest 11,786 in SPDR SP Technology on October 20, 2024 and sell it today you would earn a total of 86.00 from holding SPDR SP Technology or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
SPDR SP Technology vs. Xtrackers ShortDAX
Performance |
| Timeline |
| SPDR SP Technology |
| Xtrackers ShortDAX |
SPDR SP and Xtrackers ShortDAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Xtrackers ShortDAX
The main advantage of trading using opposite SPDR SP and Xtrackers ShortDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Xtrackers ShortDAX 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 ShortDAX will offset losses from the drop in Xtrackers ShortDAX's long position.| SPDR SP vs. UBS Fund Solutions | SPDR SP vs. Xtrackers II | SPDR SP vs. Xtrackers Nikkei 225 | SPDR SP vs. iShares VII PLC |
| Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
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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