Correlation Between Xtrackers ShortDAX and BC IRON

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

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

Diversification Opportunities for Xtrackers ShortDAX and BC IRON

-0.71

Correlation Coefficient

Xtrackers ShortDAX  BC IRON

Pay attention - limited upside

The 3 months correlation between Xtrackers and BC3 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON 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 BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and BC IRON go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and BC IRON

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the BC IRON. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.45 times less risky than BC IRON. The etf trades about -0.2 of its potential returns per unit of risk. The BC IRON is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  14.00  in BC IRON on April 21, 2025 and sell it today you would earn a total of  5.00  from holding BC IRON or generate 35.71% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  BC IRON

Xtrackers ShortDAX

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers ShortDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

BC IRON

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BC IRON are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BC IRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and BC IRON

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

The idea behind Xtrackers ShortDAX and BC IRON 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.