Correlation Between Xtrackers ShortDAX and BANK CENTRAL

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

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

Diversification Opportunities for Xtrackers ShortDAX and BANK CENTRAL

0.89

Correlation Coefficient

Xtrackers ShortDAX  BANK CENTRAL

Very poor diversification

The 3 months correlation between Xtrackers and BANK is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA 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 BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and BANK CENTRAL go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and BANK CENTRAL

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the BANK CENTRAL. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.2 times less risky than BANK CENTRAL. The etf trades about -0.17 of its potential returns per unit of risk. The BANK CENTRAL ASIA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  53.00  in BANK CENTRAL ASIA on December 30, 2024 and sell it today you would lose (8.00) from holding BANK CENTRAL ASIA or give up 15.09% of portfolio value over 90 days.

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

Xtrackers ShortDAX  vs.  BANK CENTRAL ASIA

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.

BANK CENTRAL ASIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK CENTRAL ASIA 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 technical and fundamental 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 BANK CENTRAL

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

The idea behind Xtrackers ShortDAX and BANK CENTRAL ASIA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.