Correlation Between Xtrackers ShortDAX and Iberdrola
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Iberdrola 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 Iberdrola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Iberdrola SA, you can compare the effects of market volatilities on Xtrackers ShortDAX and Iberdrola 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 Iberdrola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Iberdrola.
Diversification Opportunities for Xtrackers ShortDAX and Iberdrola
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Iberdrola is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Iberdrola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberdrola SA 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 Iberdrola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberdrola SA has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Iberdrola go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Iberdrola
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Iberdrola. In addition to that, Xtrackers ShortDAX is 1.15 times more volatile than Iberdrola SA. It trades about -0.18 of its total potential returns per unit of risk. Iberdrola SA is currently generating about 0.02 per unit of volatility. If you would invest 1,339 in Iberdrola SA on September 11, 2024 and sell it today you would earn a total of 15.00 from holding Iberdrola SA or generate 1.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Xtrackers ShortDAX vs. Iberdrola SA
Performance |
Timeline |
Xtrackers ShortDAX |
Iberdrola SA |
Xtrackers ShortDAX and Iberdrola Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers ShortDAX and Iberdrola
The main advantage of trading using opposite Xtrackers ShortDAX and Iberdrola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Iberdrola 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 Iberdrola will offset losses from the drop in Iberdrola's long position.Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers SP 500 | Xtrackers ShortDAX vs. Xtrackers MSCI |
Iberdrola vs. Boiron SA | Iberdrola vs. SOLSTAD OFFSHORE NK | Iberdrola vs. RELIANCE STEEL AL | Iberdrola vs. BlueScope Steel Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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