Correlation Between Xtrackers ShortDAX and PROSUS NV

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

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

Diversification Opportunities for Xtrackers ShortDAX and PROSUS NV

-0.79

Correlation Coefficient

Xtrackers ShortDAX  PROSUS NV

Pay attention - limited upside

The 3 months correlation between Xtrackers and PROSUS is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and PROSUS NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSUS NV ADR 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 PROSUS NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSUS NV ADR has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and PROSUS NV go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and PROSUS NV

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the PROSUS NV. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.3 times less risky than PROSUS NV. The etf trades about -0.07 of its potential returns per unit of risk. The PROSUS NV ADR is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  654.00  in PROSUS NV ADR on September 3, 2024 and sell it today you would earn a total of  91.00  from holding PROSUS NV ADR or generate 13.91% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  PROSUS NV ADR

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.

PROSUS NV ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PROSUS NV ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PROSUS NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and PROSUS NV

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

The idea behind Xtrackers ShortDAX and PROSUS NV ADR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.