Correlation Between Xtrackers ShortDAX and United States

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

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

Diversification Opportunities for Xtrackers ShortDAX and United States

-0.27

Correlation Coefficient

Xtrackers ShortDAX  United States

Very good diversification

The 3 months correlation between Xtrackers and United is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and United States go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and United States

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the United States. In addition to that, Xtrackers ShortDAX is 1.07 times more volatile than United States Cellular. It trades about -0.22 of its total potential returns per unit of risk. United States Cellular is currently generating about 0.04 per unit of volatility. If you would invest  5,950  in United States Cellular on December 23, 2024 and sell it today you would earn a total of  200.00  from holding United States Cellular or generate 3.36% 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.  United States Cellular

Xtrackers ShortDAX

Risk-Adjusted Performance

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

United States Cellular

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, United States 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 United States

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

The idea behind Xtrackers ShortDAX and United States Cellular 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.