Correlation Between DAX Index and Principal Financial
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By analyzing existing cross correlation between DAX Index and Principal Financial Group, you can compare the effects of market volatilities on DAX Index and Principal Financial 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 Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Principal Financial.
Diversification Opportunities for DAX Index and Principal Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DAX and Principal is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial 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 Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of DAX Index i.e., DAX Index and Principal Financial go up and down completely randomly.
Pair Corralation between DAX Index and Principal Financial
Assuming the 90 days trading horizon DAX Index is expected to generate 1.36 times less return on investment than Principal Financial. But when comparing it to its historical volatility, DAX Index is 2.08 times less risky than Principal Financial. It trades about 0.08 of its potential returns per unit of risk. Principal Financial Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,898 in Principal Financial Group on August 25, 2024 and sell it today you would earn a total of 1,302 from holding Principal Financial Group or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Principal Financial Group
Performance |
| Timeline |
DAX Index and Principal Financial Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Principal Financial Group
Pair trading matchups for Principal Financial
Pair Trading with DAX Index and Principal Financial
The main advantage of trading using opposite DAX Index and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Principal Financial 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 Principal Financial will offset losses from the drop in Principal Financial's long position.| DAX Index vs. Granite Construction | DAX Index vs. AGRICULTBK HADR25 YC | DAX Index vs. ADRIATIC METALS LS 013355 | DAX Index vs. GREENX METALS LTD |
| Principal Financial vs. NEWELL RUBBERMAID | Principal Financial vs. THRACE PLASTICS | Principal Financial vs. Columbia Sportswear | Principal Financial vs. Transport International Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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