Correlation Between DAX Index and Templeton Emerging
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By analyzing existing cross correlation between DAX Index and Templeton Emerging Mkt, you can compare the effects of market volatilities on DAX Index and Templeton Emerging 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 Templeton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Templeton Emerging.
Diversification Opportunities for DAX Index and Templeton Emerging
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DAX and Templeton is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Templeton Emerging Mkt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging Mkt 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 Templeton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging Mkt has no effect on the direction of DAX Index i.e., DAX Index and Templeton Emerging go up and down completely randomly.
Pair Corralation between DAX Index and Templeton Emerging
Assuming the 90 days trading horizon DAX Index is expected to generate 1.22 times more return on investment than Templeton Emerging. However, DAX Index is 1.22 times more volatile than Templeton Emerging Mkt. It trades about 0.5 of its potential returns per unit of risk. Templeton Emerging Mkt is currently generating about 0.02 per unit of risk. If you would invest 1,903,364 in DAX Index on September 13, 2024 and sell it today you would earn a total of 139,263 from holding DAX Index or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Templeton Emerging Mkt
Performance |
| Timeline |
DAX Index and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Templeton Emerging Mkt
Pair trading matchups for Templeton Emerging
Pair Trading with DAX Index and Templeton Emerging
The main advantage of trading using opposite DAX Index and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Templeton Emerging 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 Templeton Emerging will offset losses from the drop in Templeton Emerging's long position.| DAX Index vs. Consolidated Communications Holdings | DAX Index vs. Spirent Communications plc | DAX Index vs. Gamma Communications plc | DAX Index vs. CITIC Telecom International |
| Templeton Emerging vs. Templeton Global Bond | Templeton Emerging vs. Templeton Asian Bond | Templeton Emerging vs. Templeton Global Bond | Templeton Emerging vs. Esfera Robotics R |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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