Correlation Between Xtrackers ShortDAX and GUOTAI JUNAN

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

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

Diversification Opportunities for Xtrackers ShortDAX and GUOTAI JUNAN

0.21

Correlation Coefficient

Xtrackers ShortDAX  GUOTAI JUNAN

Modest diversification

The 3 months correlation between Xtrackers and GUOTAI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC 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 GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and GUOTAI JUNAN go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and GUOTAI JUNAN

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the GUOTAI JUNAN. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.62 times less risky than GUOTAI JUNAN. The etf trades about -0.16 of its potential returns per unit of risk. The GUOTAI JUNAN SEC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  133.00  in GUOTAI JUNAN SEC on October 24, 2024 and sell it today you would lose (4.00) from holding GUOTAI JUNAN SEC or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Xtrackers ShortDAX  vs.  GUOTAI JUNAN SEC

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.

GUOTAI JUNAN SEC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUOTAI JUNAN SEC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GUOTAI JUNAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and GUOTAI JUNAN

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

The idea behind Xtrackers ShortDAX and GUOTAI JUNAN SEC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.