Correlation Between DAX Index and Rheinmetall
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By analyzing existing cross correlation between DAX Index and Rheinmetall AG, you can compare the effects of market volatilities on DAX Index and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Rheinmetall.
Diversification Opportunities for DAX Index and Rheinmetall
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and Rheinmetall is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of DAX Index i.e., DAX Index and Rheinmetall go up and down completely randomly.
Pair Corralation between DAX Index and Rheinmetall
Assuming the 90 days trading horizon DAX Index is expected to generate 4.39 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, DAX Index is 2.67 times less risky than Rheinmetall. It trades about 0.2 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 48,950 in Rheinmetall AG on October 27, 2024 and sell it today you would earn a total of 24,090 from holding Rheinmetall AG or generate 49.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.36% |
| Values | Daily Returns |
DAX Index vs. Rheinmetall AG
Performance |
| Timeline |
DAX Index and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Rheinmetall AG
Pair trading matchups for Rheinmetall
Pair Trading with DAX Index and Rheinmetall
The main advantage of trading using opposite DAX Index and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| DAX Index vs. Q2M Managementberatung AG | DAX Index vs. Cleanaway Waste Management | DAX Index vs. Fukuyama Transporting Co | DAX Index vs. Ares Management Corp |
| Rheinmetall vs. DISTRICT METALS | Rheinmetall vs. FAST RETAIL ADR | Rheinmetall vs. RETAIL FOOD GROUP | Rheinmetall 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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