Correlation Between DAX Index and TESCO PLC
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By analyzing existing cross correlation between DAX Index and TESCO PLC ADR1, you can compare the effects of market volatilities on DAX Index and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and TESCO PLC.
Diversification Opportunities for DAX Index and TESCO PLC
Good diversification
The 3 months correlation between DAX and TESCO is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and TESCO PLC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC ADR1 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC ADR1 has no effect on the direction of DAX Index i.e., DAX Index and TESCO PLC go up and down completely randomly.
Pair Corralation between DAX Index and TESCO PLC
Assuming the 90 days trading horizon DAX Index is expected to generate 3.34 times less return on investment than TESCO PLC. But when comparing it to its historical volatility, DAX Index is 1.98 times less risky than TESCO PLC. It trades about 0.05 of its potential returns per unit of risk. TESCO PLC ADR1 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,056 in TESCO PLC ADR1 on September 1, 2024 and sell it today you would earn a total of 204.00 from holding TESCO PLC ADR1 or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
DAX Index vs. TESCO PLC ADR1
Performance |
| Timeline |
DAX Index and TESCO PLC Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
TESCO PLC ADR1
Pair trading matchups for TESCO PLC
Pair Trading with DAX Index and TESCO PLC
The main advantage of trading using opposite DAX Index and TESCO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, TESCO PLC 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 TESCO PLC will offset losses from the drop in TESCO PLC's long position.| DAX Index vs. BE Semiconductor Industries | DAX Index vs. REGAL ASIAN INVESTMENTS | DAX Index vs. SEI INVESTMENTS | DAX Index vs. National Beverage Corp |
| TESCO PLC vs. TESCO PLC LS 0633333 | TESCO PLC vs. Superior Plus Corp | TESCO PLC vs. NMI Holdings | TESCO PLC vs. Origin Agritech |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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