Correlation Between DAX Index and Dow
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By analyzing existing cross correlation between DAX Index and Dow Inc, you can compare the effects of market volatilities on DAX Index and Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Dow.
Diversification Opportunities for DAX Index and Dow
Average diversification
The 3 months correlation between DAX and Dow is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of DAX Index i.e., DAX Index and Dow go up and down completely randomly.
Pair Corralation between DAX Index and Dow
Assuming the 90 days trading horizon DAX Index is expected to generate 0.5 times more return on investment than Dow. However, DAX Index is 2.01 times less risky than Dow. It trades about -0.03 of its potential returns per unit of risk. Dow Inc is currently generating about -0.19 per unit of risk. If you would invest 1,944,300 in DAX Index on August 25, 2024 and sell it today you would lose (12,041) from holding DAX Index or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Dow Inc
Performance |
| Timeline |
DAX Index and Dow Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Dow Inc
Pair trading matchups for Dow
Pair Trading with DAX Index and Dow
The main advantage of trading using opposite DAX Index and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Dow 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 Dow will offset losses from the drop in Dow's long position.| DAX Index vs. Granite Construction | DAX Index vs. AGRICULTBK HADR25 YC | DAX Index vs. ADRIATIC METALS LS 013355 | DAX Index vs. GREENX METALS LTD |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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