Correlation Between DAX Index and FARO Technologies
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By analyzing existing cross correlation between DAX Index and FARO Technologies, you can compare the effects of market volatilities on DAX Index and FARO Technologies 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 FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and FARO Technologies.
Diversification Opportunities for DAX Index and FARO Technologies
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DAX and FARO is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of DAX Index i.e., DAX Index and FARO Technologies go up and down completely randomly.
Pair Corralation between DAX Index and FARO Technologies
Assuming the 90 days trading horizon DAX Index is expected to under-perform the FARO Technologies. But the index apears to be less risky and, when comparing its historical volatility, DAX Index is 8.53 times less risky than FARO Technologies. The index trades about -0.05 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,710 in FARO Technologies on August 29, 2024 and sell it today you would earn a total of 870.00 from holding FARO Technologies or generate 50.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DAX Index vs. FARO Technologies
Performance |
| Timeline |
DAX Index and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
FARO Technologies
Pair trading matchups for FARO Technologies
Pair Trading with DAX Index and FARO Technologies
The main advantage of trading using opposite DAX Index and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| DAX Index vs. Gladstone Investment | DAX Index vs. REINET INVESTMENTS SCA | DAX Index vs. CarsalesCom | DAX Index vs. MARKET VECTR RETAIL |
| FARO Technologies vs. LION ONE METALS | FARO Technologies vs. Chongqing Machinery Electric | FARO Technologies vs. Sumitomo Mitsui Construction | FARO Technologies vs. Perseus Mining Limited |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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