Correlation Between Xtrackers ShortDAX and SHINHAN FINL

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Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX and SHINHAN FINL 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 SHINHAN FINL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and SHINHAN FINL ADR1, you can compare the effects of market volatilities on Xtrackers ShortDAX and SHINHAN FINL 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 SHINHAN FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and SHINHAN FINL.

Diversification Opportunities for Xtrackers ShortDAX and SHINHAN FINL

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Xtrackers and SHINHAN is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and SHINHAN FINL ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHINHAN FINL ADR1 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 SHINHAN FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHINHAN FINL ADR1 has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and SHINHAN FINL go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and SHINHAN FINL

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the SHINHAN FINL. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers ShortDAX is 1.43 times less risky than SHINHAN FINL. The etf trades about -0.16 of its potential returns per unit of risk. The SHINHAN FINL ADR1 is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,005  in SHINHAN FINL ADR1 on April 23, 2025 and sell it today you would earn a total of  1,155  from holding SHINHAN FINL ADR1 or generate 38.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Xtrackers ShortDAX  vs.  SHINHAN FINL ADR1

 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.
SHINHAN FINL ADR1 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SHINHAN FINL ADR1 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SHINHAN FINL reported solid returns over the last few months and may actually be approaching a breakup point.

Xtrackers ShortDAX and SHINHAN FINL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtrackers ShortDAX and SHINHAN FINL

The main advantage of trading using opposite Xtrackers ShortDAX and SHINHAN FINL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX position performs unexpectedly, SHINHAN FINL 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 SHINHAN FINL will offset losses from the drop in SHINHAN FINL's long position.
The idea behind Xtrackers ShortDAX and SHINHAN FINL ADR1 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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