Correlation Between Xtrackers ShortDAX and Expat Slovenia

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

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

Diversification Opportunities for Xtrackers ShortDAX and Expat Slovenia

-0.59

Correlation Coefficient

Xtrackers ShortDAX  Expat Slovenia

Excellent diversification

The 3 months correlation between Xtrackers and Expat is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Expat Slovenia SBI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Slovenia SBI 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 Expat Slovenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Slovenia SBI has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Expat Slovenia go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Expat Slovenia

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Expat Slovenia. In addition to that, Xtrackers ShortDAX is 2.69 times more volatile than Expat Slovenia SBI. It trades about -0.15 of its total potential returns per unit of risk. Expat Slovenia SBI is currently generating about 0.08 per unit of volatility. If you would invest  176.00  in Expat Slovenia SBI on September 17, 2024 and sell it today you would earn a total of  5.00  from holding Expat Slovenia SBI or generate 2.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Expat Slovenia SBI

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 fragile 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.

Expat Slovenia SBI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Expat Slovenia SBI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Expat Slovenia 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 Expat Slovenia

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

The idea behind Xtrackers ShortDAX and Expat Slovenia SBI 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.