Correlation Between Cars and DAX Index
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By analyzing existing cross correlation between Cars Inc and DAX Index, you can compare the effects of market volatilities on Cars and DAX Index 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 Cars with a short position of DAX Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and DAX Index.
Diversification Opportunities for Cars and DAX Index
Average diversification
The 3 months correlation between Cars and DAX is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and DAX Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAX Index and Cars 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 Cars Inc are associated (or correlated) with DAX Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAX Index has no effect on the direction of Cars i.e., Cars and DAX Index go up and down completely randomly.
Pair Corralation between Cars and DAX Index
Assuming the 90 days horizon Cars is expected to generate 1.39 times less return on investment than DAX Index. In addition to that, Cars is 3.62 times more volatile than DAX Index. It trades about 0.02 of its total potential returns per unit of risk. DAX Index is currently generating about 0.09 per unit of volatility. If you would invest 1,553,364 in DAX Index on November 7, 2024 and sell it today you would earn a total of 597,206 from holding DAX Index or generate 38.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. DAX Index
Performance |
| Timeline |
Cars and DAX Index Volatility Contrast
Predicted Return Density |
| Returns |
Cars Inc
Pair trading matchups for Cars
DAX Index
Pair trading matchups for DAX Index
Pair Trading with Cars and DAX Index
The main advantage of trading using opposite Cars and DAX Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, DAX Index 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 DAX Index will offset losses from the drop in DAX Index's long position.| Cars vs. AECOM TECHNOLOGY | Cars vs. ATOSS SOFTWARE | Cars vs. MACOM Technology Solutions | Cars vs. CarsalesCom |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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