Correlation Between Xtrackers ShortDAX and TFS FINANCIAL

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

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

Diversification Opportunities for Xtrackers ShortDAX and TFS FINANCIAL

-0.63

Correlation Coefficient

Xtrackers ShortDAX  TFS FINANCIAL

Excellent diversification

The 3 months correlation between Xtrackers and TFS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of Xtrackers ShortDAX i.e., Xtrackers ShortDAX and TFS FINANCIAL go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and TFS FINANCIAL

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the TFS FINANCIAL. In addition to that, Xtrackers ShortDAX is 1.47 times more volatile than TFS FINANCIAL. It trades about -0.2 of its total potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.1 per unit of volatility. If you would invest  1,038  in TFS FINANCIAL on April 21, 2025 and sell it today you would earn a total of  82.00  from holding TFS FINANCIAL or generate 7.9% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  TFS FINANCIAL

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.

TFS FINANCIAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TFS FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Xtrackers ShortDAX and TFS FINANCIAL

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

The idea behind Xtrackers ShortDAX and TFS FINANCIAL 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.