Correlation Between DAX Index and VIEMED HLTHCARE

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Can any of the company-specific risk be diversified away by investing in both DAX Index and VIEMED HLTHCARE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DAX Index and VIEMED HLTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and VIEMED HLTHCARE INC, you can compare the effects of market volatilities on DAX Index and VIEMED HLTHCARE 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 VIEMED HLTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and VIEMED HLTHCARE.

Diversification Opportunities for DAX Index and VIEMED HLTHCARE

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between DAX and VIEMED is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and VIEMED HLTHCARE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIEMED HLTHCARE INC 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 VIEMED HLTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIEMED HLTHCARE INC has no effect on the direction of DAX Index i.e., DAX Index and VIEMED HLTHCARE go up and down completely randomly.
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Pair Corralation between DAX Index and VIEMED HLTHCARE

Assuming the 90 days trading horizon DAX Index is expected to generate 0.24 times more return on investment than VIEMED HLTHCARE. However, DAX Index is 4.12 times less risky than VIEMED HLTHCARE. It trades about 0.09 of its potential returns per unit of risk. VIEMED HLTHCARE INC is currently generating about 0.02 per unit of risk. If you would invest  1,406,926  in DAX Index on September 21, 2024 and sell it today you would earn a total of  590,060  from holding DAX Index or generate 41.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

DAX Index  vs.  VIEMED HLTHCARE INC

 Performance 
       Timeline  

DAX Index and VIEMED HLTHCARE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and VIEMED HLTHCARE

The main advantage of trading using opposite DAX Index and VIEMED HLTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, VIEMED HLTHCARE 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 VIEMED HLTHCARE will offset losses from the drop in VIEMED HLTHCARE's long position.
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The idea behind DAX Index and VIEMED HLTHCARE INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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