Correlation Between Xtrackers ShortDAX and Great-West Lifeco

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

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

Diversification Opportunities for Xtrackers ShortDAX and Great-West Lifeco

0.09

Correlation Coefficient

Xtrackers ShortDAX  Great-West Lifeco

Significant diversification

The 3 months correlation between Xtrackers and Great-West is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Great West Lifeco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifeco 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 Great-West Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifeco has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Great-West Lifeco go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Great-West Lifeco

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Great-West Lifeco. In addition to that, Xtrackers ShortDAX is 1.19 times more volatile than Great West Lifeco. It trades about -0.42 of its total potential returns per unit of risk. Great West Lifeco is currently generating about -0.1 per unit of volatility. If you would invest  3,140  in Great West Lifeco on October 22, 2024 and sell it today you would lose (60.00) from holding Great West Lifeco or give up 1.91% of portfolio value over 90 days.

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

Xtrackers ShortDAX  vs.  Great West Lifeco

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Great West Lifeco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifeco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Great-West Lifeco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and Great-West Lifeco

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

The idea behind Xtrackers ShortDAX and Great West Lifeco 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.