Correlation Between Xtrackers ShortDAX and Meta Financial

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

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

Diversification Opportunities for Xtrackers ShortDAX and Meta Financial

-0.44

Correlation Coefficient

Xtrackers ShortDAX  Meta Financial

Very good diversification

The 3 months correlation between Xtrackers and Meta is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group 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 Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Meta Financial go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Meta Financial

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Meta Financial. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.95 times less risky than Meta Financial. The etf trades about -0.11 of its potential returns per unit of risk. The Meta Financial Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,496  in Meta Financial Group on October 6, 2024 and sell it today you would earn a total of  554.00  from holding Meta Financial Group or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Meta Financial Group

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.

Meta Financial Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meta Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and Meta Financial

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

The idea behind Xtrackers ShortDAX and Meta Financial Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.