Correlation Between Xtrackers ShortDAX and Lyxor Euro

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

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

Diversification Opportunities for Xtrackers ShortDAX and Lyxor Euro

-0.66

Correlation Coefficient

Xtrackers ShortDAX  Lyxor Euro

Excellent diversification

The 3 months correlation between Xtrackers and Lyxor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Lyxor Euro Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Euro Government 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 Lyxor Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Euro Government has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Lyxor Euro go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Lyxor Euro

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Lyxor Euro. In addition to that, Xtrackers ShortDAX is 3.52 times more volatile than Lyxor Euro Government. It trades about -0.15 of its total potential returns per unit of risk. Lyxor Euro Government is currently generating about 0.01 per unit of volatility. If you would invest  768.00  in Lyxor Euro Government on September 15, 2024 and sell it today you would earn a total of  2.00  from holding Lyxor Euro Government or generate 0.26% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  Lyxor Euro Government

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Lyxor Euro Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor Euro Government has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Lyxor Euro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xtrackers ShortDAX and Lyxor Euro

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

The idea behind Xtrackers ShortDAX and Lyxor Euro Government 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.