Correlation Between Xtrackers ShortDAX and PetMed Express

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Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and PetMed Express 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 PetMed Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and PetMed Express, you can compare the effects of market volatilities on Xtrackers ShortDAX and PetMed Express 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 PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and PetMed Express.

Diversification Opportunities for Xtrackers ShortDAX and PetMed Express

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Xtrackers and PetMed is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and PetMed Express go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and PetMed Express

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the PetMed Express. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.97 times less risky than PetMed Express. The etf trades about -0.15 of its potential returns per unit of risk. The PetMed Express is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  286.00  in PetMed Express on April 24, 2025 and sell it today you would lose (5.00) from holding PetMed Express or give up 1.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Xtrackers ShortDAX  vs.  PetMed Express

 Performance 
       Timeline  
Xtrackers ShortDAX 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
PetMed Express 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days PetMed Express has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PetMed Express is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Xtrackers ShortDAX and PetMed Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers ShortDAX and PetMed Express

The main advantage of trading using opposite Xtrackers ShortDAX and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.
The idea behind Xtrackers ShortDAX and PetMed Express 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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