Correlation Between DAX Index and ABB
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By analyzing existing cross correlation between DAX Index and ABB, you can compare the effects of market volatilities on DAX Index and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and ABB.
Diversification Opportunities for DAX Index and ABB
Poor diversification
The 3 months correlation between DAX and ABB is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB 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 ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of DAX Index i.e., DAX Index and ABB go up and down completely randomly.
Pair Corralation between DAX Index and ABB
Assuming the 90 days trading horizon DAX Index is expected to generate 2.41 times less return on investment than ABB. But when comparing it to its historical volatility, DAX Index is 2.25 times less risky than ABB. It trades about 0.08 of its potential returns per unit of risk. ABB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,729 in ABB on August 30, 2024 and sell it today you would earn a total of 2,571 from holding ABB or generate 94.21% 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. ABB
Performance |
| Timeline |
DAX Index and ABB Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
ABB
Pair trading matchups for ABB
Pair Trading with DAX Index and ABB
The main advantage of trading using opposite DAX Index and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| DAX Index vs. Gladstone Investment | DAX Index vs. REINET INVESTMENTS SCA | DAX Index vs. CarsalesCom | DAX Index vs. MARKET VECTR RETAIL |
| ABB vs. Wizz Air Holdings | ABB vs. Altair Engineering | ABB vs. Enter Air SA | ABB vs. Tianjin Capital Environmental |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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