Correlation Between DAX Index and Rio Tinto
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By analyzing existing cross correlation between DAX Index and Rio Tinto Group, you can compare the effects of market volatilities on DAX Index and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Rio Tinto.
Diversification Opportunities for DAX Index and Rio Tinto
Poor diversification
The 3 months correlation between DAX and Rio is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of DAX Index i.e., DAX Index and Rio Tinto go up and down completely randomly.
Pair Corralation between DAX Index and Rio Tinto
Assuming the 90 days trading horizon DAX Index is expected to generate 0.42 times more return on investment than Rio Tinto. However, DAX Index is 2.39 times less risky than Rio Tinto. It trades about 0.09 of its potential returns per unit of risk. Rio Tinto Group is currently generating about 0.0 per unit of risk. If you would invest 1,662,899 in DAX Index on September 2, 2024 and sell it today you would earn a total of 299,746 from holding DAX Index or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Rio Tinto Group
Performance |
| Timeline |
DAX Index and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Rio Tinto Group
Pair trading matchups for Rio Tinto
Pair Trading with DAX Index and Rio Tinto
The main advantage of trading using opposite DAX Index and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| DAX Index vs. FEMALE HEALTH | DAX Index vs. CDN IMPERIAL BANK | DAX Index vs. Webster Financial | DAX Index vs. Cardinal Health |
| Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Rio Tinto Group | Rio Tinto vs. Vale SA | Rio Tinto vs. Vale SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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