Correlation Between Xtrackers ShortDAX and UBS ETF

Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and UBS ETF 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 UBS ETF 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 UBS ETF SMIM, you can compare the effects of market volatilities on Xtrackers ShortDAX and UBS ETF 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 UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and UBS ETF.

Diversification Opportunities for Xtrackers ShortDAX and UBS ETF

-0.88

Correlation Coefficient

Xtrackers ShortDAX  UBS ETF

Pay attention - limited upside

The 3 months correlation between Xtrackers and UBS is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and UBS ETF SMIM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF SMIM 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 UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF SMIM has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and UBS ETF go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and UBS ETF

Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the UBS ETF. In addition to that, Xtrackers ShortDAX is 1.34 times more volatile than UBS ETF SMIM. It trades about -0.14 of its total potential returns per unit of risk. UBS ETF SMIM is currently generating about 0.22 per unit of volatility. If you would invest  27,205  in UBS ETF SMIM on April 30, 2025 and sell it today you would earn a total of  2,270  from holding UBS ETF SMIM or generate 8.34% return on investment over 90 days.

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

Xtrackers ShortDAX Daily  vs.  UBS ETF SMIM

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 latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

UBS ETF SMIM

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF SMIM are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, UBS ETF may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Xtrackers ShortDAX and UBS ETF

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

The idea behind Xtrackers ShortDAX Daily and UBS ETF SMIM 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 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.