Correlation Between Xtrackers ShortDAX and Xtrackers Nifty

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

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

Diversification Opportunities for Xtrackers ShortDAX and Xtrackers Nifty

-0.37

Correlation Coefficient

Xtrackers ShortDAX  Xtrackers Nifty

Very good diversification

The 3 months correlation between Xtrackers and Xtrackers is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Xtrackers Nifty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Nifty 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 Xtrackers Nifty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Nifty has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Xtrackers Nifty go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Xtrackers Nifty

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Xtrackers Nifty. In addition to that, Xtrackers ShortDAX is 1.83 times more volatile than Xtrackers Nifty. It trades about -0.15 of its total potential returns per unit of risk. Xtrackers Nifty is currently generating about 0.05 per unit of volatility. If you would invest  26,030  in Xtrackers Nifty on September 16, 2024 and sell it today you would earn a total of  650.00  from holding Xtrackers Nifty or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Xtrackers Nifty

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

Xtrackers Nifty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Nifty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Xtrackers Nifty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and Xtrackers Nifty

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

The idea behind Xtrackers ShortDAX and Xtrackers Nifty 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.