Correlation Between DAX Index and British American
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By analyzing existing cross correlation between DAX Index and British American Tobacco, you can compare the effects of market volatilities on DAX Index and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and British American.
Diversification Opportunities for DAX Index and British American
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAX and British is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of DAX Index i.e., DAX Index and British American go up and down completely randomly.
Pair Corralation between DAX Index and British American
Assuming the 90 days trading horizon DAX Index is expected to generate 7.43 times less return on investment than British American. But when comparing it to its historical volatility, DAX Index is 1.26 times less risky than British American. It trades about 0.03 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,707 in British American Tobacco on August 26, 2024 and sell it today you would earn a total of 872.00 from holding British American Tobacco or generate 32.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. British American Tobacco
Performance |
| Timeline |
DAX Index and British American Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
British American Tobacco
Pair trading matchups for British American
Pair Trading with DAX Index and British American
The main advantage of trading using opposite DAX Index and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| DAX Index vs. Vishay Intertechnology | DAX Index vs. CHINA EDUCATION GROUP | DAX Index vs. Casio Computer CoLtd | DAX Index vs. Amkor Technology |
| British American vs. VIRGIN WINES UK | British American vs. National Storage Affiliates | British American vs. Xenia Hotels Resorts | British American vs. Park Hotels Resorts |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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