Correlation Between Xtrackers ShortDAX and IShares Core

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

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

Diversification Opportunities for Xtrackers ShortDAX and IShares Core

-0.79

Correlation Coefficient

Xtrackers ShortDAX  IShares Core

Pay attention - limited upside

The 3 months correlation between Xtrackers and IShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX Daily and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Daily are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and IShares Core go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and IShares Core

Assuming the 90 days trading horizon Xtrackers ShortDAX Daily is expected to under-perform the IShares Core. In addition to that, Xtrackers ShortDAX is 1.06 times more volatile than iShares Core SP. It trades about -0.15 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.32 per unit of volatility. If you would invest  58,830  in iShares Core SP on April 29, 2025 and sell it today you would earn a total of  9,220  from holding iShares Core SP or generate 15.67% return on investment over 90 days.

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

Xtrackers ShortDAX Daily  vs.  iShares Core SP

Xtrackers ShortDAX Daily

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers ShortDAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

iShares Core SP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Core unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers ShortDAX and IShares Core

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

The idea behind Xtrackers ShortDAX Daily and iShares Core SP 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.