Correlation Between DAX Index and Companhia
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By analyzing existing cross correlation between DAX Index and Companhia de Saneamento, you can compare the effects of market volatilities on DAX Index and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Companhia.
Diversification Opportunities for DAX Index and Companhia
Very weak diversification
The 3 months correlation between DAX and Companhia is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of DAX Index i.e., DAX Index and Companhia go up and down completely randomly.
Pair Corralation between DAX Index and Companhia
Assuming the 90 days trading horizon DAX Index is expected to generate 1.87 times less return on investment than Companhia. But when comparing it to its historical volatility, DAX Index is 1.87 times less risky than Companhia. It trades about 0.28 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Companhia de Saneamento on November 27, 2024 and sell it today you would earn a total of 150.00 from holding Companhia de Saneamento or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Companhia de Saneamento
Performance |
| Timeline |
DAX Index and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Companhia de Saneamento
Pair trading matchups for Companhia
Pair Trading with DAX Index and Companhia
The main advantage of trading using opposite DAX Index and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| DAX Index vs. CAIRN HOMES EO | DAX Index vs. Hisense Home Appliances | DAX Index vs. STRAYER EDUCATION | DAX Index vs. CHINA EDUCATION GROUP |
| Companhia vs. Lamar Advertising | Companhia vs. BOS BETTER ONLINE | Companhia vs. Western Copper and | Companhia vs. Carsales |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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