Correlation Between Xtrackers ShortDAX and POSBO UNSPADRS/20YC1

Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtrackers ShortDAX and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on Xtrackers ShortDAX and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and POSBO UNSPADRS/20YC1.

Diversification Opportunities for Xtrackers ShortDAX and POSBO UNSPADRS/20YC1

-0.9

Correlation Coefficient

Xtrackers ShortDAX  POSBO UNSPADRS/20YC1

Pay attention - limited upside

The 3 months correlation between Xtrackers and POSBO is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS/20YC1 has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and POSBO UNSPADRS/20YC1 go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and POSBO UNSPADRS/20YC1

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the POSBO UNSPADRS/20YC1. In addition to that, Xtrackers ShortDAX is 1.54 times more volatile than POSBO UNSPADRS20YC1. It trades about -0.17 of its total potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.06 per unit of volatility. If you would invest  1,080  in POSBO UNSPADRS20YC1 on December 30, 2024 and sell it today you would earn a total of  50.00  from holding POSBO UNSPADRS20YC1 or generate 4.63% 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.  POSBO UNSPADRS20YC1

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.

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, POSBO UNSPADRS/20YC1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and POSBO UNSPADRS/20YC1

The main advantage of trading using opposite Xtrackers ShortDAX and POSBO UNSPADRS/20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 will offset losses from the drop in POSBO UNSPADRS/20YC1's long position.

The idea behind Xtrackers ShortDAX and POSBO UNSPADRS20YC1 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.