Correlation Between Xtrackers ShortDAX and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and Applied Materials 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 Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Applied Materials, you can compare the effects of market volatilities on Xtrackers ShortDAX and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Applied Materials.
Diversification Opportunities for Xtrackers ShortDAX and Applied Materials
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xtrackers and Applied is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Applied Materials go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Applied Materials
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Applied Materials. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.44 times less risky than Applied Materials. The etf trades about -0.26 of its potential returns per unit of risk. The Applied Materials is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 12,383 in Applied Materials on April 10, 2025 and sell it today you would earn a total of 3,841 from holding Applied Materials or generate 31.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Xtrackers ShortDAX vs. Applied Materials
Performance |
Timeline |
Xtrackers ShortDAX |
Applied Materials |
Xtrackers ShortDAX and Applied Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xtrackers ShortDAX and Applied Materials
The main advantage of trading using opposite Xtrackers ShortDAX and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.Xtrackers ShortDAX vs. Xtrackers II Global | Xtrackers ShortDAX vs. Xtrackers FTSE | Xtrackers ShortDAX vs. Xtrackers MSCI | Xtrackers ShortDAX vs. Xtrackers Stoxx |
Applied Materials vs. ASSOC BR FOODS | Applied Materials vs. Singapore Telecommunications Limited | Applied Materials vs. Citic Telecom International | Applied Materials vs. COMBA TELECOM SYST |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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