Correlation Between DAX Index and Masterflex

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Can any of the company-specific risk be diversified away by investing in both DAX Index and Masterflex at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DAX Index and Masterflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and Masterflex SE, you can compare the effects of market volatilities on DAX Index and Masterflex 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 Masterflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Masterflex.

Diversification Opportunities for DAX Index and Masterflex

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between DAX and Masterflex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Masterflex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterflex SE 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 Masterflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterflex SE has no effect on the direction of DAX Index i.e., DAX Index and Masterflex go up and down completely randomly.
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Pair Corralation between DAX Index and Masterflex

Assuming the 90 days trading horizon DAX Index is expected to generate 1.28 times less return on investment than Masterflex. But when comparing it to its historical volatility, DAX Index is 3.12 times less risky than Masterflex. It trades about 0.07 of its potential returns per unit of risk. Masterflex SE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  776.00  in Masterflex SE on August 25, 2024 and sell it today you would earn a total of  56.00  from holding Masterflex SE or generate 7.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy96.35%
ValuesDaily Returns

DAX Index  vs.  Masterflex SE

 Performance 
       Timeline  

DAX Index and Masterflex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and Masterflex

The main advantage of trading using opposite DAX Index and Masterflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Masterflex 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 Masterflex will offset losses from the drop in Masterflex's long position.
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The idea behind DAX Index and Masterflex SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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