Correlation Between Xtrackers ShortDAX and Vastned Retail

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

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

Diversification Opportunities for Xtrackers ShortDAX and Vastned Retail

-0.56

Correlation Coefficient

Xtrackers ShortDAX  Vastned Retail

Excellent diversification

The 3 months correlation between Xtrackers and Vastned is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Vastned Retail go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Vastned Retail

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Vastned Retail. In addition to that, Xtrackers ShortDAX is 2.3 times more volatile than Vastned Retail NV. It trades about -0.07 of its total potential returns per unit of risk. Vastned Retail NV is currently generating about 0.08 per unit of volatility. If you would invest  2,360  in Vastned Retail NV on September 3, 2024 and sell it today you would earn a total of  80.00  from holding Vastned Retail NV or generate 3.39% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  Vastned Retail NV

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 unsteady 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.

Vastned Retail NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and Vastned Retail

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

The idea behind Xtrackers ShortDAX and Vastned Retail NV 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.