Correlation Between Xtrackers ShortDAX and Williams Sonoma

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

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

Diversification Opportunities for Xtrackers ShortDAX and Williams Sonoma

0.31

Correlation Coefficient

Xtrackers ShortDAX  Williams Sonoma

Weak diversification

The 3 months correlation between Xtrackers and Williams is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma 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 Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Williams Sonoma go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Williams Sonoma

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Williams Sonoma. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.2 times less risky than Williams Sonoma. The etf trades about -0.22 of its potential returns per unit of risk. The Williams Sonoma is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  17,912  in Williams Sonoma on December 25, 2024 and sell it today you would lose (2,737) from holding Williams Sonoma or give up 15.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Williams Sonoma

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.

Williams Sonoma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Williams Sonoma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Xtrackers ShortDAX and Williams Sonoma

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

The idea behind Xtrackers ShortDAX and Williams Sonoma 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.