Correlation Between Xtrackers ShortDAX and Naranja Standard

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

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

Diversification Opportunities for Xtrackers ShortDAX and Naranja Standard

-0.24

Correlation Coefficient

Xtrackers ShortDAX  Naranja Standard

Very good diversification

The 3 months correlation between Xtrackers and Naranja is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Naranja Standard Poors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naranja Standard Poors 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 Naranja Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naranja Standard Poors has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Naranja Standard go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Naranja Standard

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Naranja Standard. In addition to that, Xtrackers ShortDAX is 1.49 times more volatile than Naranja Standard Poors. It trades about -0.42 of its total potential returns per unit of risk. Naranja Standard Poors is currently generating about -0.1 per unit of volatility. If you would invest  13,729  in Naranja Standard Poors on October 23, 2024 and sell it today you would lose (188.00) from holding Naranja Standard Poors or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Naranja Standard Poors

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 unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Naranja Standard Poors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naranja Standard Poors are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Naranja Standard is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xtrackers ShortDAX and Naranja Standard

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

The idea behind Xtrackers ShortDAX and Naranja Standard Poors 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.