Correlation Between Xtrackers ShortDAX and Graham Holdings

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

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

Diversification Opportunities for Xtrackers ShortDAX and Graham Holdings

-0.32

Correlation Coefficient

Xtrackers ShortDAX  Graham Holdings

Very good diversification

The 3 months correlation between Xtrackers and Graham is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 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 Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Graham Holdings go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Graham Holdings

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Graham Holdings. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.41 times less risky than Graham Holdings. The etf trades about -0.08 of its potential returns per unit of risk. The Graham Holdings Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  68,832  in Graham Holdings Co on September 4, 2024 and sell it today you would earn a total of  20,168  from holding Graham Holdings Co or generate 29.3% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  Graham Holdings Co

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.

Graham Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Graham Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and Graham Holdings

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

The idea behind Xtrackers ShortDAX and Graham Holdings Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.