Correlation Between Xtrackers ShortDAX and Fortuna Silver

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

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

Diversification Opportunities for Xtrackers ShortDAX and Fortuna Silver

-0.63

Correlation Coefficient

Xtrackers ShortDAX  Fortuna Silver

Excellent diversification

The 3 months correlation between Xtrackers and Fortuna is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Fortuna Silver go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Fortuna Silver

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Fortuna Silver. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.92 times less risky than Fortuna Silver. The etf trades about -0.16 of its potential returns per unit of risk. The Fortuna Silver Mines is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Fortuna Silver Mines on September 12, 2024 and sell it today you would earn a total of  46.00  from holding Fortuna Silver Mines or generate 13.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Fortuna Silver Mines

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 unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Fortuna Silver Mines

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortuna Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and Fortuna Silver

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

The idea behind Xtrackers ShortDAX and Fortuna Silver Mines 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.