Correlation Between Xtrackers ShortDAX and SBI Holdings

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

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

Diversification Opportunities for Xtrackers ShortDAX and SBI Holdings

-0.82

Correlation Coefficient

Xtrackers ShortDAX  SBI Holdings

Pay attention - limited upside

The 3 months correlation between Xtrackers and SBI is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings 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 SBI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Holdings has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and SBI Holdings go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and SBI Holdings

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the SBI Holdings. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.5 times less risky than SBI Holdings. The etf trades about -0.53 of its potential returns per unit of risk. The SBI Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,400  in SBI Holdings on October 25, 2024 and sell it today you would earn a total of  40.00  from holding SBI Holdings or generate 1.67% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  SBI Holdings

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 unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

SBI Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBI Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and SBI Holdings

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

The idea behind Xtrackers ShortDAX and SBI Holdings 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.