Correlation Between Xtrackers ShortDAX and Moodys

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

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

Diversification Opportunities for Xtrackers ShortDAX and Moodys

-0.9

Correlation Coefficient

Xtrackers ShortDAX  Moodys

Pay attention - limited upside

The 3 months correlation between Xtrackers and Moodys is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys 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 Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Moodys go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Moodys

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Moodys. In addition to that, Xtrackers ShortDAX is 1.15 times more volatile than Moodys. It trades about -0.16 of its total potential returns per unit of risk. Moodys is currently generating about 0.13 per unit of volatility. If you would invest  38,135  in Moodys on April 23, 2025 and sell it today you would earn a total of  4,865  from holding Moodys or generate 12.76% 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.  Moodys

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.

Moodys

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moodys are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Moodys reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and Moodys

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

The idea behind Xtrackers ShortDAX and Moodys 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.