Correlation Between Xtrackers ShortDAX and BNY Mellon

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

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

Diversification Opportunities for Xtrackers ShortDAX and BNY Mellon

-0.65

Correlation Coefficient

Xtrackers ShortDAX  BNY Mellon

Excellent diversification

The 3 months correlation between Xtrackers and BNY is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and BNY Mellon Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Global 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Global has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and BNY Mellon go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and BNY Mellon

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the BNY Mellon. In addition to that, Xtrackers ShortDAX is 3.82 times more volatile than BNY Mellon Global. It trades about -0.04 of its total potential returns per unit of risk. BNY Mellon Global is currently generating about 0.03 per unit of volatility. If you would invest  161.00  in BNY Mellon Global on October 1, 2024 and sell it today you would earn a total of  4.00  from holding BNY Mellon Global or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	45.11%
Values	Daily Returns

Xtrackers ShortDAX  vs.  BNY Mellon Global

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 nearly stable basic indicators, Xtrackers ShortDAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BNY Mellon Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon Global are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, BNY Mellon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xtrackers ShortDAX and BNY Mellon

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

The idea behind Xtrackers ShortDAX and BNY Mellon Global 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.