Correlation Between Xtrackers ShortDAX and FedEx

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

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

Diversification Opportunities for Xtrackers ShortDAX and FedEx

-0.23

Correlation Coefficient

Xtrackers ShortDAX  FedEx

Very good diversification

The 3 months correlation between Xtrackers and FedEx is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx 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 FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and FedEx go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and FedEx

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 0.73 times more return on investment than FedEx. However, Xtrackers ShortDAX is 1.37 times less risky than FedEx. It trades about -0.22 of its potential returns per unit of risk. FedEx is currently generating about -0.16 per unit of risk. If you would invest  80.00  in Xtrackers ShortDAX on December 24, 2024 and sell it today you would lose (19.00) from holding Xtrackers ShortDAX or give up 23.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Xtrackers ShortDAX  vs.  FedEx

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.

FedEx

Risk-Adjusted Performance

Very Weak

Over the last 90 days FedEx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Xtrackers ShortDAX and FedEx

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

The idea behind Xtrackers ShortDAX and FedEx 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.