Correlation Between Xtrackers ShortDAX and CITIC

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

By analyzing existing cross correlation between Xtrackers ShortDAX and CITIC LTD ADR5, you can compare the effects of market volatilities on Xtrackers ShortDAX and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and CITIC.

Diversification Opportunities for Xtrackers ShortDAX and CITIC

-0.49

Correlation Coefficient

Xtrackers ShortDAX  CITIC

Very good diversification

The 3 months correlation between Xtrackers and CITIC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 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 CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC LTD ADR5 has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and CITIC go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and CITIC

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the CITIC. In addition to that, Xtrackers ShortDAX is 1.27 times more volatile than CITIC LTD ADR5. It trades about -0.1 of its total potential returns per unit of risk. CITIC LTD ADR5 is currently generating about 0.3 per unit of volatility. If you would invest  496.00  in CITIC LTD ADR5 on April 30, 2025 and sell it today you would earn a total of  154.00  from holding CITIC LTD ADR5 or generate 31.05% 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  vs.  CITIC LTD ADR5

Xtrackers ShortDAX

Risk-Adjusted Performance

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 unsteady 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.

CITIC LTD ADR5

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC LTD ADR5 are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and CITIC

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

The idea behind Xtrackers ShortDAX and CITIC LTD ADR5 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.