Correlation Between DAX Index and Contact Energy
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By analyzing existing cross correlation between DAX Index and Contact Energy Limited, you can compare the effects of market volatilities on DAX Index and Contact Energy 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 Contact Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Contact Energy.
Diversification Opportunities for DAX Index and Contact Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between DAX and Contact is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Contact Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Energy 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 Contact Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Energy has no effect on the direction of DAX Index i.e., DAX Index and Contact Energy go up and down completely randomly.
Pair Corralation between DAX Index and Contact Energy
Assuming the 90 days trading horizon DAX Index is expected to generate 0.5 times more return on investment than Contact Energy. However, DAX Index is 2.0 times less risky than Contact Energy. It trades about 0.05 of its potential returns per unit of risk. Contact Energy Limited is currently generating about 0.0 per unit of risk. If you would invest 1,860,816 in DAX Index on September 1, 2024 and sell it today you would earn a total of 101,829 from holding DAX Index or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
DAX Index vs. Contact Energy Limited
Performance |
| Timeline |
DAX Index and Contact Energy Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Contact Energy Limited
Pair trading matchups for Contact Energy
Pair Trading with DAX Index and Contact Energy
The main advantage of trading using opposite DAX Index and Contact Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Contact Energy 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 Contact Energy will offset losses from the drop in Contact Energy'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 |
| Contact Energy vs. Fukuyama Transporting Co | Contact Energy vs. ATOSS SOFTWARE | Contact Energy vs. AXWAY SOFTWARE EO | Contact Energy vs. American Eagle Outfitters |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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