Correlation Between DAX Index and IShares Nikkei
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By analyzing existing cross correlation between DAX Index and iShares Nikkei 225, you can compare the effects of market volatilities on DAX Index and IShares Nikkei 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 IShares Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and IShares Nikkei.
Diversification Opportunities for DAX Index and IShares Nikkei
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAX and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and iShares Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nikkei 225 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 IShares Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nikkei 225 has no effect on the direction of DAX Index i.e., DAX Index and IShares Nikkei go up and down completely randomly.
Pair Corralation between DAX Index and IShares Nikkei
Assuming the 90 days trading horizon DAX Index is expected to generate 0.78 times more return on investment than IShares Nikkei. However, DAX Index is 1.29 times less risky than IShares Nikkei. It trades about 0.08 of its potential returns per unit of risk. iShares Nikkei 225 is currently generating about 0.04 per unit of risk. If you would invest 1,426,119 in DAX Index on August 28, 2024 and sell it today you would earn a total of 514,401 from holding DAX Index or generate 36.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
DAX Index vs. iShares Nikkei 225
Performance |
| Timeline |
DAX Index and IShares Nikkei Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
iShares Nikkei 225
Pair trading matchups for IShares Nikkei
Pair Trading with DAX Index and IShares Nikkei
The main advantage of trading using opposite DAX Index and IShares Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, IShares Nikkei 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 IShares Nikkei will offset losses from the drop in IShares Nikkei's long position.| DAX Index vs. QUEEN S ROAD | DAX Index vs. TITANIUM TRANSPORTGROUP | DAX Index vs. COPLAND ROAD CAPITAL | DAX Index vs. Broadcom |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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