Correlation Between Xtrackers ShortDAX and EOG RESOURCES

Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and EOG RESOURCES 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 EOG RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtrackers ShortDAX and EOG RESOURCES, you can compare the effects of market volatilities on Xtrackers ShortDAX and EOG RESOURCES 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 EOG RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and EOG RESOURCES.

Diversification Opportunities for Xtrackers ShortDAX and EOG RESOURCES

-0.67

Correlation Coefficient

Xtrackers ShortDAX  EOG RESOURCES

Excellent diversification

The 3 months correlation between Xtrackers and EOG is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and EOG RESOURCES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG RESOURCES 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 are associated (or correlated) with EOG RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG RESOURCES has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and EOG RESOURCES go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and EOG RESOURCES

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 1.38 times more return on investment than EOG RESOURCES. However, Xtrackers ShortDAX is 1.38 times more volatile than EOG RESOURCES. It trades about 0.15 of its potential returns per unit of risk. EOG RESOURCES is currently generating about -0.05 per unit of risk. If you would invest  90.00  in Xtrackers ShortDAX on February 6, 2024 and sell it today you would earn a total of  4.00  from holding Xtrackers ShortDAX or generate 4.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Xtrackers ShortDAX  vs.  EOG RESOURCES

Xtrackers ShortDAX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers ShortDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

EOG RESOURCES

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EOG RESOURCES are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EOG RESOURCES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and EOG RESOURCES

The main advantage of trading using opposite Xtrackers ShortDAX and EOG RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, EOG RESOURCES 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 EOG RESOURCES will offset losses from the drop in EOG RESOURCES's long position.

The idea behind Xtrackers ShortDAX and EOG RESOURCES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.