Correlation Between DAX Index and Nestl SA
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By analyzing existing cross correlation between DAX Index and Nestl SA, you can compare the effects of market volatilities on DAX Index and Nestl SA 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 Nestl SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Nestl SA.
Diversification Opportunities for DAX Index and Nestl SA
Excellent diversification
The 3 months correlation between DAX and Nestl is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestl SA 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 Nestl SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestl SA has no effect on the direction of DAX Index i.e., DAX Index and Nestl SA go up and down completely randomly.
Pair Corralation between DAX Index and Nestl SA
Assuming the 90 days trading horizon DAX Index is expected to generate 0.84 times more return on investment than Nestl SA. However, DAX Index is 1.19 times less risky than Nestl SA. It trades about 0.26 of its potential returns per unit of risk. Nestl SA is currently generating about -0.21 per unit of risk. If you would invest 1,914,785 in DAX Index on September 5, 2024 and sell it today you would earn a total of 108,429 from holding DAX Index or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Nestl SA
Performance |
| Timeline |
DAX Index and Nestl SA Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Nestl SA
Pair trading matchups for Nestl SA
Pair Trading with DAX Index and Nestl SA
The main advantage of trading using opposite DAX Index and Nestl SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Nestl SA 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 Nestl SA will offset losses from the drop in Nestl SA's long position.| DAX Index vs. Hochschild Mining plc | DAX Index vs. Ming Le Sports | DAX Index vs. PLAYSTUDIOS A DL 0001 | DAX Index vs. USWE SPORTS AB |
| Nestl SA vs. Vastned Retail NV | Nestl SA vs. REMEDY ENTERTAINMENT OYJ | Nestl SA vs. Retail Estates NV | Nestl SA vs. ULTRA CLEAN HLDGS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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