diversifiable risk of combining Xtrackers and Xtrackers ShortDAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers II and Xtrackers ShortDAX, you can compare the effects of market volatilities on Xtrackers and Xtrackers ShortDAX 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 with a short position of Xtrackers ShortDAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and Xtrackers ShortDAX.
Diversification Opportunities for Xtrackers and Xtrackers ShortDAX
Pair Corralation between Xtrackers and Xtrackers ShortDAX
Assuming the 90 days trading horizon Xtrackers II is expected to generate 0.23 times more return on investment than Xtrackers ShortDAX. However, Xtrackers II is 4.33 times less risky than Xtrackers ShortDAX. It trades about -0.01 of its potential returns per unit of risk. Xtrackers ShortDAX is currently generating about -0.04 per unit of risk. If you would invest 1,604 in Xtrackers II on November 24, 2023 and sell it today you would lose (36.00) from holding Xtrackers II or give up 2.24% of portfolio value over 90 days.
|3 Months [change]
Xtrackers II - vs. Xtrackers - ShortDAX
Xtrackers and Xtrackers ShortDAX Volatility Contrast
Pair Trading with Xtrackers and Xtrackers ShortDAXThe main advantage of trading using opposite Xtrackers and Xtrackers ShortDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers position performs unexpectedly, Xtrackers ShortDAX 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 ShortDAX will offset losses from the drop in Xtrackers ShortDAX's long position. The idea behind Xtrackers II and Xtrackers ShortDAX 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.
Check out your portfolio center.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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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