Correlation Between DAX Index and APPLIED MATERIALS
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By analyzing existing cross correlation between DAX Index and APPLIED MATERIALS, you can compare the effects of market volatilities on DAX Index and APPLIED MATERIALS 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 APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and APPLIED MATERIALS.
Diversification Opportunities for DAX Index and APPLIED MATERIALS
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAX and APPLIED is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS 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 APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of DAX Index i.e., DAX Index and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between DAX Index and APPLIED MATERIALS
Assuming the 90 days trading horizon DAX Index is expected to generate 0.36 times more return on investment than APPLIED MATERIALS. However, DAX Index is 2.82 times less risky than APPLIED MATERIALS. It trades about -0.05 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.09 per unit of risk. If you would invest 1,953,162 in DAX Index on August 29, 2024 and sell it today you would lose (23,564) from holding DAX Index or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. APPLIED MATERIALS
Performance |
| Timeline |
DAX Index and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
APPLIED MATERIALS
Pair trading matchups for APPLIED MATERIALS
Pair Trading with DAX Index and APPLIED MATERIALS
The main advantage of trading using opposite DAX Index and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, APPLIED MATERIALS 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS's long position.| DAX Index vs. ELMOS SEMICONDUCTOR | DAX Index vs. ALTAIR RES INC | DAX Index vs. Fair Isaac Corp | DAX Index vs. Taiwan Semiconductor Manufacturing |
| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Microsoft | APPLIED MATERIALS vs. Microsoft |
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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