Correlation Between Xtrackers Short and BHCCN

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

By analyzing existing cross correlation between Xtrackers Short Duration and BHCCN 14 15 OCT 30, you can compare the effects of market volatilities on Xtrackers Short and BHCCN 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 Short with a short position of BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Short and BHCCN.

Diversification Opportunities for Xtrackers Short and BHCCN

0.61

Correlation Coefficient

Xtrackers Short  BHCCN

Poor diversification

The 3 months correlation between Xtrackers and BHCCN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Short Duration and BHCCN 14 15 OCT 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 14 15 and Xtrackers Short 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 Short Duration are associated (or correlated) with BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 14 15 has no effect on the direction of Xtrackers Short i.e., Xtrackers Short and BHCCN go up and down completely randomly.

Pair Corralation between Xtrackers Short and BHCCN

Given the investment horizon of 90 days Xtrackers Short is expected to generate 3.6 times less return on investment than BHCCN. But when comparing it to its historical volatility, Xtrackers Short Duration is 7.78 times less risky than BHCCN. It trades about 0.13 of its potential returns per unit of risk. BHCCN 14 15 OCT 30 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,944  in BHCCN 14 15 OCT 30 on September 23, 2024 and sell it today you would earn a total of  1,924  from holding BHCCN 14 15 OCT 30 or generate 32.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	52.11%
Values	Daily Returns

Xtrackers Short Duration  vs.  BHCCN 14 15 OCT 30

Xtrackers Short Duration

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Short Duration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Xtrackers Short is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

BHCCN 14 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 14 15 OCT 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for BHCCN 14 15 OCT 30 investors.

Pair Trading with Xtrackers Short and BHCCN

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

The idea behind Xtrackers Short Duration and BHCCN 14 15 OCT 30 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.