Correlation Between Xtrackers Plc and Xtrackers ShortDAX

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

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

Diversification Opportunities for Xtrackers Plc and Xtrackers ShortDAX

-0.18

Correlation Coefficient

Xtrackers Plc  Xtrackers ShortDAX

Good diversification

The 3 months correlation between Xtrackers and Xtrackers is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Plc and Xtrackers ShortDAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ShortDAX Daily and Xtrackers Plc 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 Plc 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 Daily has no effect on the direction of Xtrackers Plc i.e., Xtrackers Plc and Xtrackers ShortDAX go up and down completely randomly.

Pair Corralation between Xtrackers Plc and Xtrackers ShortDAX

Assuming the 90 days trading horizon Xtrackers Plc is expected to generate 0.09 times more return on investment than Xtrackers ShortDAX. However, Xtrackers Plc is 10.61 times less risky than Xtrackers ShortDAX. It trades about 0.23 of its potential returns per unit of risk. Xtrackers ShortDAX Daily is currently generating about -0.03 per unit of risk. If you would invest  3,074  in Xtrackers Plc on May 4, 2025 and sell it today you would earn a total of  66.00  from holding Xtrackers Plc or generate 2.15% return on investment over 90 days.

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

Xtrackers Plc   vs.  Xtrackers ShortDAX Daily

Xtrackers Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Xtrackers Plc is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Xtrackers ShortDAX Daily

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers ShortDAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xtrackers ShortDAX is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xtrackers Plc and Xtrackers ShortDAX

The main advantage of trading using opposite Xtrackers Plc and Xtrackers ShortDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Plc 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.

The idea behind Xtrackers Plc and Xtrackers ShortDAX Daily 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.