Correlation Between Xtrackers ShortDAX and MGP Ingredients

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

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

Diversification Opportunities for Xtrackers ShortDAX and MGP Ingredients

-0.36

Correlation Coefficient

Xtrackers ShortDAX  MGP Ingredients

Very good diversification

The 3 months correlation between Xtrackers and MGP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients 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 MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and MGP Ingredients go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and MGP Ingredients

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the MGP Ingredients. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.47 times less risky than MGP Ingredients. The etf trades about -0.16 of its potential returns per unit of risk. The MGP Ingredients is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,453  in MGP Ingredients on April 23, 2025 and sell it today you would earn a total of  109.00  from holding MGP Ingredients or generate 4.44% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  MGP Ingredients

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.

MGP Ingredients

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MGP Ingredients are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MGP Ingredients may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Xtrackers ShortDAX and MGP Ingredients

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

The idea behind Xtrackers ShortDAX and MGP Ingredients 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.