Correlation Between Xtrackers ShortDAX and BioNTech

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

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

Diversification Opportunities for Xtrackers ShortDAX and BioNTech

0.56

Correlation Coefficient

Xtrackers ShortDAX  BioNTech

Very weak diversification

The 3 months correlation between Xtrackers and BioNTech is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE 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 BioNTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioNTech SE has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and BioNTech go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and BioNTech

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the BioNTech. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.18 times less risky than BioNTech. The etf trades about -0.22 of its potential returns per unit of risk. The BioNTech SE is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  11,000  in BioNTech SE on December 26, 2024 and sell it today you would lose (1,900) from holding BioNTech SE or give up 17.27% of portfolio value over 90 days.

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

Xtrackers ShortDAX  vs.  BioNTech SE

Xtrackers ShortDAX

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

BioNTech SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Xtrackers ShortDAX and BioNTech

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

The idea behind Xtrackers ShortDAX and BioNTech SE 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.