Correlation Between Xtrackers ShortDAX and Citigroup

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

Diversification Opportunities for Xtrackers ShortDAX and Citigroup

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Xtrackers and Citigroup is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Citigroup go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Citigroup

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Citigroup. In addition to that, Xtrackers ShortDAX is 1.36 times more volatile than Citigroup. It trades about -0.16 of its total potential returns per unit of risk. Citigroup is currently generating about 0.56 per unit of volatility. If you would invest  6,775  in Citigroup on April 22, 2025 and sell it today you would earn a total of  1,246  from holding Citigroup or generate 18.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Xtrackers ShortDAX  vs.  Citigroup

 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.
Citigroup 

Risk-Adjusted Performance

Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers ShortDAX and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers ShortDAX and Citigroup

The main advantage of trading using opposite Xtrackers ShortDAX and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.
The idea behind Xtrackers ShortDAX and Citigroup 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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