Correlation Between Xtrackers ShortDAX and Amundi Label

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

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

Diversification Opportunities for Xtrackers ShortDAX and Amundi Label

-0.49

Correlation Coefficient

Xtrackers ShortDAX  Amundi Label

Very good diversification

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

Pair Corralation between Xtrackers ShortDAX and Amundi Label

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Amundi Label. In addition to that, Xtrackers ShortDAX is 2.35 times more volatile than Amundi Label Actions. It trades about -0.46 of its total potential returns per unit of risk. Amundi Label Actions is currently generating about 0.38 per unit of volatility. If you would invest  29,335  in Amundi Label Actions on September 22, 2024 and sell it today you would earn a total of  1,132  from holding Amundi Label Actions or generate 3.86% 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.  Amundi Label Actions

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 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.

Amundi Label Actions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Label Actions are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Amundi Label is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xtrackers ShortDAX and Amundi Label

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

The idea behind Xtrackers ShortDAX and Amundi Label Actions 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.