Correlation Between DAX Index and Microsoft
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By analyzing existing cross correlation between DAX Index and Microsoft, you can compare the effects of market volatilities on DAX Index and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Microsoft.
Diversification Opportunities for DAX Index and Microsoft
Very weak diversification
The 3 months correlation between DAX and Microsoft is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of DAX Index i.e., DAX Index and Microsoft go up and down completely randomly.
Pair Corralation between DAX Index and Microsoft
Assuming the 90 days trading horizon DAX Index is expected to generate 1.51 times less return on investment than Microsoft. But when comparing it to its historical volatility, DAX Index is 1.79 times less risky than Microsoft. It trades about 0.08 of its potential returns per unit of risk. Microsoft is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29,801 in Microsoft on August 31, 2024 and sell it today you would earn a total of 10,044 from holding Microsoft or generate 33.7% 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. Microsoft
Performance |
| Timeline |
DAX Index and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Microsoft
Pair trading matchups for Microsoft
Pair Trading with DAX Index and Microsoft
The main advantage of trading using opposite DAX Index and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| DAX Index vs. Magnachip Semiconductor | DAX Index vs. Taiwan Semiconductor Manufacturing | DAX Index vs. Broadcom | DAX Index vs. MagnaChip Semiconductor Corp |
| Microsoft vs. Geely Automobile Holdings | Microsoft vs. CarsalesCom | Microsoft vs. INTER CARS SA | Microsoft vs. Motorcar Parts of |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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