Correlation Between Xtrackers ShortDAX and IncomeShares Apple

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

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

Diversification Opportunities for Xtrackers ShortDAX and IncomeShares Apple

-0.54

Correlation Coefficient

Xtrackers ShortDAX  IncomeShares Apple

Excellent diversification

The 3 months correlation between Xtrackers and IncomeShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and IncomeShares Apple Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares Apple 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 IncomeShares Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares Apple has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and IncomeShares Apple go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and IncomeShares Apple

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the IncomeShares Apple. In addition to that, Xtrackers ShortDAX is 1.07 times more volatile than IncomeShares Apple Options. It trades about -0.18 of its total potential returns per unit of risk. IncomeShares Apple Options is currently generating about 0.0 per unit of volatility. If you would invest  935.00  in IncomeShares Apple Options on October 25, 2024 and sell it today you would lose (5.00) from holding IncomeShares Apple Options or give up 0.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.27%
Values	Daily Returns

Xtrackers ShortDAX  vs.  IncomeShares Apple Options

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.

IncomeShares Apple

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IncomeShares Apple Options has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IncomeShares Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xtrackers ShortDAX and IncomeShares Apple

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

The idea behind Xtrackers ShortDAX and IncomeShares Apple Options 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.