Correlation Between Dow Jones and LG DAX
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By analyzing existing cross correlation between Dow Jones Industrial and LG DAX Daily, you can compare the effects of market volatilities on Dow Jones and LG DAX 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 Dow Jones with a short position of LG DAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and LG DAX.
Diversification Opportunities for Dow Jones and LG DAX
Excellent diversification
The 3 months correlation between Dow and DES2 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of Dow Jones i.e., Dow Jones and LG DAX go up and down completely randomly.
Pair Corralation between Dow Jones and LG DAX
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.43 times more return on investment than LG DAX. However, Dow Jones Industrial is 2.3 times less risky than LG DAX. It trades about 0.08 of its potential returns per unit of risk. LG DAX Daily is currently generating about -0.05 per unit of risk. If you would invest 3,410,864 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,080,201 from holding Dow Jones Industrial or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Dow Jones Industrial vs. LG DAX Daily
Performance |
| Timeline |
Dow Jones and LG DAX Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
LG DAX Daily
Pair trading matchups for LG DAX
Pair Trading with Dow Jones and LG DAX
The main advantage of trading using opposite Dow Jones and LG DAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, LG DAX 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 LG DAX will offset losses from the drop in LG DAX's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| LG DAX vs. LG DAX Daily | LG DAX vs. iShares Govt Bond | LG DAX vs. Amundi MSCI Europe | LG DAX vs. iShares Global AAA AA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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