Correlation Between DAX Index and DFCC Bank
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By analyzing existing cross correlation between DAX Index and DFCC Bank PLC, you can compare the effects of market volatilities on DAX Index and DFCC Bank 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 DFCC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and DFCC Bank.
Diversification Opportunities for DAX Index and DFCC Bank
Poor diversification
The 3 months correlation between DAX and DFCC is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and DFCC Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFCC Bank PLC 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 DFCC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFCC Bank PLC has no effect on the direction of DAX Index i.e., DAX Index and DFCC Bank go up and down completely randomly.
Pair Corralation between DAX Index and DFCC Bank
Assuming the 90 days trading horizon DAX Index is expected to generate 3.62 times less return on investment than DFCC Bank. But when comparing it to its historical volatility, DAX Index is 1.79 times less risky than DFCC Bank. It trades about 0.05 of its potential returns per unit of risk. DFCC Bank PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,510 in DFCC Bank PLC on August 31, 2024 and sell it today you would earn a total of 250.00 from holding DFCC Bank PLC or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
DAX Index vs. DFCC Bank PLC
Performance |
| Timeline |
DAX Index and DFCC Bank Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
DFCC Bank PLC
Pair trading matchups for DFCC Bank
Pair Trading with DAX Index and DFCC Bank
The main advantage of trading using opposite DAX Index and DFCC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, DFCC Bank 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 DFCC Bank will offset losses from the drop in DFCC Bank's long position.| DAX Index vs. Magnachip Semiconductor | DAX Index vs. Taiwan Semiconductor Manufacturing | DAX Index vs. Broadcom | DAX Index vs. MagnaChip Semiconductor Corp |
| DFCC Bank vs. HNB Finance | DFCC Bank vs. Prime Lands Residencies | DFCC Bank vs. Jat Holdings PLC | DFCC Bank vs. E M L |
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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