Correlation Between Xtrackers ShortDAX and Swedbank Robur

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

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

Diversification Opportunities for Xtrackers ShortDAX and Swedbank Robur

-0.83

Correlation Coefficient

Xtrackers ShortDAX  Swedbank Robur

Pay attention - limited upside

The 3 months correlation between Xtrackers and Swedbank is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Swedbank Robur Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank Robur Corporate 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 Swedbank Robur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank Robur Corporate has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Swedbank Robur go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Swedbank Robur

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Swedbank Robur. In addition to that, Xtrackers ShortDAX is 6.63 times more volatile than Swedbank Robur Corporate. It trades about -0.05 of its total potential returns per unit of risk. Swedbank Robur Corporate is currently generating about 0.1 per unit of volatility. If you would invest  870.00  in Swedbank Robur Corporate on October 4, 2024 and sell it today you would earn a total of  106.00  from holding Swedbank Robur Corporate or generate 12.18% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  Swedbank Robur Corporate

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 nearly stable basic indicators, Xtrackers ShortDAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Swedbank Robur Corporate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank Robur Corporate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Swedbank Robur is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Xtrackers ShortDAX and Swedbank Robur

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

The idea behind Xtrackers ShortDAX and Swedbank Robur Corporate 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.