Correlation Between DAX Index and Alcoa Corp
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By analyzing existing cross correlation between DAX Index and Alcoa Corp, you can compare the effects of market volatilities on DAX Index and Alcoa Corp 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 DAX Index with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Alcoa Corp.
Diversification Opportunities for DAX Index and Alcoa Corp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and Alcoa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and DAX Index 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 DAX Index are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of DAX Index i.e., DAX Index and Alcoa Corp go up and down completely randomly.
Pair Corralation between DAX Index and Alcoa Corp
Assuming the 90 days trading horizon DAX Index is expected to generate 0.25 times more return on investment than Alcoa Corp. However, DAX Index is 3.98 times less risky than Alcoa Corp. It trades about 0.08 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.02 per unit of risk. If you would invest 1,449,789 in DAX Index on September 3, 2024 and sell it today you would earn a total of 512,856 from holding DAX Index or generate 35.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Alcoa Corp
Performance |
| Timeline |
DAX Index and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Alcoa Corp
Pair trading matchups for Alcoa Corp
Pair Trading with DAX Index and Alcoa Corp
The main advantage of trading using opposite DAX Index and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| DAX Index vs. SPORT LISBOA E | DAX Index vs. FUYO GENERAL LEASE | DAX Index vs. Live Nation Entertainment | DAX Index vs. Transport International Holdings |
| Alcoa Corp vs. PENN NATL GAMING | Alcoa Corp vs. BE Semiconductor Industries | Alcoa Corp vs. IMPERIAL TOBACCO | Alcoa Corp vs. Magnachip Semiconductor |
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 CEOs Directory module to screen CEOs from public companies around the world.
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