Correlation Between DAX Index and CMS Energy
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By analyzing existing cross correlation between DAX Index and CMS Energy, you can compare the effects of market volatilities on DAX Index and CMS 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 CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and CMS Energy.
Diversification Opportunities for DAX Index and CMS Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAX and CMS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS 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 CMS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMS Energy has no effect on the direction of DAX Index i.e., DAX Index and CMS Energy go up and down completely randomly.
Pair Corralation between DAX Index and CMS Energy
Assuming the 90 days trading horizon DAX Index is expected to generate 0.7 times more return on investment than CMS Energy. However, DAX Index is 1.42 times less risky than CMS Energy. It trades about 0.53 of its potential returns per unit of risk. CMS Energy is currently generating about 0.08 per unit of risk. If you would invest 1,900,311 in DAX Index on September 14, 2024 and sell it today you would earn a total of 142,316 from holding DAX Index or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. CMS Energy
Performance |
| Timeline |
DAX Index and CMS Energy Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
CMS Energy
Pair trading matchups for CMS Energy
Pair Trading with DAX Index and CMS Energy
The main advantage of trading using opposite DAX Index and CMS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, CMS 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 CMS Energy will offset losses from the drop in CMS Energy's long position.| DAX Index vs. CARSALESCOM | DAX Index vs. Sumitomo Mitsui Construction | DAX Index vs. H FARM SPA | DAX Index vs. Nufarm Limited |
| CMS Energy vs. Gold Road Resources | CMS Energy vs. GOLD ROAD RES | CMS Energy vs. INTERSHOP Communications Aktiengesellschaft | CMS Energy vs. TRAINLINE PLC LS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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