Correlation Between Xtrackers ShortDAX and Chevron

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

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

Diversification Opportunities for Xtrackers ShortDAX and Chevron

-0.45

Correlation Coefficient

Xtrackers ShortDAX  Chevron

Very good diversification

The 3 months correlation between Xtrackers and Chevron is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Chevron go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Chevron

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Chevron. In addition to that, Xtrackers ShortDAX is 1.2 times more volatile than Chevron. It trades about -0.16 of its total potential returns per unit of risk. Chevron is currently generating about 0.09 per unit of volatility. If you would invest  11,794  in Chevron on April 23, 2025 and sell it today you would earn a total of  1,002  from holding Chevron or generate 8.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Xtrackers ShortDAX  vs.  Chevron

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.

Chevron

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Chevron may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Xtrackers ShortDAX and Chevron

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

The idea behind Xtrackers ShortDAX and Chevron 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.