Correlation Between Xtrackers ShortDAX and Airbus SE

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

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

Diversification Opportunities for Xtrackers ShortDAX and Airbus SE

-0.79

Correlation Coefficient

Xtrackers ShortDAX  Airbus SE

Pay attention - limited upside

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

Pair Corralation between Xtrackers ShortDAX and Airbus SE

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Airbus SE. In addition to that, Xtrackers ShortDAX is 1.1 times more volatile than Airbus SE. It trades about -0.05 of its total potential returns per unit of risk. Airbus SE is currently generating about 0.05 per unit of volatility. If you would invest  3,012  in Airbus SE on October 10, 2024 and sell it today you would earn a total of  948.00  from holding Airbus SE or generate 31.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Airbus SE

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.

Airbus SE

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Airbus SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and Airbus SE

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

The idea behind Xtrackers ShortDAX and Airbus 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.