Correlation Between DAX Index and Federal Agricultural
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By analyzing existing cross correlation between DAX Index and Federal Agricultural Mortgage, you can compare the effects of market volatilities on DAX Index and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Federal Agricultural.
Diversification Opportunities for DAX Index and Federal Agricultural
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DAX and Federal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of DAX Index i.e., DAX Index and Federal Agricultural go up and down completely randomly.
Pair Corralation between DAX Index and Federal Agricultural
Assuming the 90 days trading horizon DAX Index is expected to generate 5.68 times less return on investment than Federal Agricultural. But when comparing it to its historical volatility, DAX Index is 3.22 times less risky than Federal Agricultural. It trades about 0.14 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 17,100 in Federal Agricultural Mortgage on September 1, 2024 and sell it today you would earn a total of 2,900 from holding Federal Agricultural Mortgage or generate 16.96% 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. Federal Agricultural Mortgage
Performance |
| Timeline |
DAX Index and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Federal Agricultural Mortgage
Pair trading matchups for Federal Agricultural
Pair Trading with DAX Index and Federal Agricultural
The main advantage of trading using opposite DAX Index and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's 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 |
| Federal Agricultural vs. Mastercard | Federal Agricultural vs. Capital One Financial | Federal Agricultural vs. ORIX Corporation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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