Correlation Between Xtrackers ShortDAX and Schneider Electric

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

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

Diversification Opportunities for Xtrackers ShortDAX and Schneider Electric

-0.77

Correlation Coefficient

Xtrackers ShortDAX  Schneider Electric

Pay attention - limited upside

The 3 months correlation between Xtrackers and Schneider is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric 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 Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Schneider Electric go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Schneider Electric

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Schneider Electric. In addition to that, Xtrackers ShortDAX is 1.13 times more volatile than Schneider Electric SE. It trades about -0.01 of its total potential returns per unit of risk. Schneider Electric SE is currently generating about 0.05 per unit of volatility. If you would invest  23,090  in Schneider Electric SE on August 31, 2024 and sell it today you would earn a total of  965.00  from holding Schneider Electric SE or generate 4.18% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  Schneider Electric SE

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 nearly stable basic indicators, Xtrackers ShortDAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Schneider Electric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Schneider Electric is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and Schneider Electric

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

The idea behind Xtrackers ShortDAX and Schneider Electric SE 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.