Correlation Between DWS Top and Xtrackers ShortDAX

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

By analyzing existing cross correlation between DWS Top Dividende and Xtrackers ShortDAX, you can compare the effects of market volatilities on DWS Top and Xtrackers ShortDAX 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 DWS Top with a short position of Xtrackers ShortDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Top and Xtrackers ShortDAX.

Diversification Opportunities for DWS Top and Xtrackers ShortDAX

0.52

Correlation Coefficient

DWS Top  Xtrackers ShortDAX

Very weak diversification

The 3 months correlation between DWS and Xtrackers is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DWS Top Dividende and Xtrackers ShortDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ShortDAX and DWS Top 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 DWS Top Dividende are associated (or correlated) with Xtrackers ShortDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ShortDAX has no effect on the direction of DWS Top i.e., DWS Top and Xtrackers ShortDAX go up and down completely randomly.

Pair Corralation between DWS Top and Xtrackers ShortDAX

Assuming the 90 days trading horizon DWS Top Dividende is expected to under-perform the Xtrackers ShortDAX. But the fund apears to be less risky and, when comparing its historical volatility, DWS Top Dividende is 1.33 times less risky than Xtrackers ShortDAX. The fund trades about -0.03 of its potential returns per unit of risk. The Xtrackers ShortDAX is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Xtrackers ShortDAX on October 9, 2024 and sell it today you would earn a total of  4.00  from holding Xtrackers ShortDAX or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

DWS Top Dividende  vs.  Xtrackers ShortDAX

DWS Top Dividende

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DWS Top Dividende has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, DWS Top is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with DWS Top and Xtrackers ShortDAX

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

The idea behind DWS Top Dividende and Xtrackers ShortDAX 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 CEOs Directory module to screen CEOs from public companies around the world.