Correlation Between Xtrackers ShortDAX and SHIONOGI

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

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

Diversification Opportunities for Xtrackers ShortDAX and SHIONOGI

-0.53

Correlation Coefficient

Xtrackers ShortDAX  SHIONOGI

Excellent diversification

The 3 months correlation between Xtrackers and SHIONOGI is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and SHIONOGI LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIONOGI LTD 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 SHIONOGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIONOGI LTD has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and SHIONOGI go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and SHIONOGI

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the SHIONOGI. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.02 times less risky than SHIONOGI. The etf trades about -0.14 of its potential returns per unit of risk. The SHIONOGI LTD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,347  in SHIONOGI LTD on September 21, 2024 and sell it today you would lose (27.00) from holding SHIONOGI LTD or give up 2.0% of portfolio value over 90 days.

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

Xtrackers ShortDAX  vs.  SHIONOGI LTD

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 latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

SHIONOGI LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIONOGI LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SHIONOGI is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xtrackers ShortDAX and SHIONOGI

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

The idea behind Xtrackers ShortDAX and SHIONOGI LTD 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.