Correlation Between DAX Index and Advanced Drainage
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By analyzing existing cross correlation between DAX Index and Advanced Drainage Systems, you can compare the effects of market volatilities on DAX Index and Advanced Drainage 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 Advanced Drainage. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Advanced Drainage.
Diversification Opportunities for DAX Index and Advanced Drainage
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DAX and Advanced is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Advanced Drainage Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Drainage Systems 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 Advanced Drainage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Drainage Systems has no effect on the direction of DAX Index i.e., DAX Index and Advanced Drainage go up and down completely randomly.
Pair Corralation between DAX Index and Advanced Drainage
Assuming the 90 days trading horizon DAX Index is expected to generate 2.93 times less return on investment than Advanced Drainage. But when comparing it to its historical volatility, DAX Index is 3.07 times less risky than Advanced Drainage. It trades about 0.07 of its potential returns per unit of risk. Advanced Drainage Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,418 in Advanced Drainage Systems on August 26, 2024 and sell it today you would earn a total of 5,182 from holding Advanced Drainage Systems or generate 69.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Advanced Drainage Systems
Performance |
| Timeline |
DAX Index and Advanced Drainage Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Advanced Drainage Systems
Pair trading matchups for Advanced Drainage
Pair Trading with DAX Index and Advanced Drainage
The main advantage of trading using opposite DAX Index and Advanced Drainage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Advanced Drainage 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 Advanced Drainage will offset losses from the drop in Advanced Drainage'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 |
| Advanced Drainage vs. Uber Technologies | Advanced Drainage vs. Amkor Technology | Advanced Drainage vs. Pembina Pipeline Corp | Advanced Drainage vs. ASPEN TECHINC DL |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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