Correlation Between DAX Index and Trane Technologies
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By analyzing existing cross correlation between DAX Index and Trane Technologies plc, you can compare the effects of market volatilities on DAX Index and Trane Technologies 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 Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Trane Technologies.
Diversification Opportunities for DAX Index and Trane Technologies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and Trane is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc 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 Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of DAX Index i.e., DAX Index and Trane Technologies go up and down completely randomly.
Pair Corralation between DAX Index and Trane Technologies
Assuming the 90 days trading horizon DAX Index is expected to generate 3.72 times less return on investment than Trane Technologies. But when comparing it to its historical volatility, DAX Index is 2.03 times less risky than Trane Technologies. It trades about 0.07 of its potential returns per unit of risk. Trane Technologies plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 16,476 in Trane Technologies plc on September 1, 2024 and sell it today you would earn a total of 22,824 from holding Trane Technologies plc or generate 138.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
DAX Index vs. Trane Technologies plc
Performance |
| Timeline |
DAX Index and Trane Technologies Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Trane Technologies plc
Pair trading matchups for Trane Technologies
Pair Trading with DAX Index and Trane Technologies
The main advantage of trading using opposite DAX Index and Trane Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Trane Technologies 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 Trane Technologies will offset losses from the drop in Trane Technologies' long position.| DAX Index vs. BE Semiconductor Industries | DAX Index vs. REGAL ASIAN INVESTMENTS | DAX Index vs. SEI INVESTMENTS | DAX Index vs. National Beverage Corp |
| Trane Technologies vs. ABB | Trane Technologies vs. Emerson Electric Co | Trane Technologies vs. Superior Plus Corp | Trane Technologies vs. NMI Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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