Correlation Between DAX Index and Rocket Internet
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By analyzing existing cross correlation between DAX Index and Rocket Internet SE, you can compare the effects of market volatilities on DAX Index and Rocket Internet 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 Rocket Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Rocket Internet.
Diversification Opportunities for DAX Index and Rocket Internet
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DAX and Rocket is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Rocket Internet SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Internet 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 Rocket Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Internet SE has no effect on the direction of DAX Index i.e., DAX Index and Rocket Internet go up and down completely randomly.
Pair Corralation between DAX Index and Rocket Internet
Assuming the 90 days trading horizon DAX Index is expected to generate 0.46 times more return on investment than Rocket Internet. However, DAX Index is 2.17 times less risky than Rocket Internet. It trades about 0.08 of its potential returns per unit of risk. Rocket Internet SE is currently generating about -0.03 per unit of risk. If you would invest 1,446,020 in DAX Index on September 4, 2024 and sell it today you would earn a total of 555,655 from holding DAX Index or generate 38.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Rocket Internet SE
Performance |
| Timeline |
DAX Index and Rocket Internet Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Rocket Internet SE
Pair trading matchups for Rocket Internet
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Rocket Internet as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Rocket Internet's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Rocket Internet's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Rocket Internet SE.
Pair Trading with DAX Index and Rocket Internet
The main advantage of trading using opposite DAX Index and Rocket Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Rocket Internet 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 Rocket Internet will offset losses from the drop in Rocket Internet's long position.| DAX Index vs. LION ONE METALS | DAX Index vs. KENNAMETAL INC | DAX Index vs. HYATT HOTELS A | DAX Index vs. Zijin Mining Group |
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Rocket Internet as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Rocket Internet's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Rocket Internet's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Rocket Internet SE.
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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