Correlation Between DAX Index and Volkswagen
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By analyzing existing cross correlation between DAX Index and Volkswagen AG, you can compare the effects of market volatilities on DAX Index and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Volkswagen.
Diversification Opportunities for DAX Index and Volkswagen
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAX and Volkswagen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of DAX Index i.e., DAX Index and Volkswagen go up and down completely randomly.
Pair Corralation between DAX Index and Volkswagen
Assuming the 90 days trading horizon DAX Index is expected to generate 0.68 times more return on investment than Volkswagen. However, DAX Index is 1.47 times less risky than Volkswagen. It trades about -0.05 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.33 per unit of risk. If you would invest 1,947,807 in DAX Index on August 30, 2024 and sell it today you would lose (21,632) from holding DAX Index or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. Volkswagen AG
Performance |
| Timeline |
DAX Index and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Volkswagen AG
Pair trading matchups for Volkswagen
Pair Trading with DAX Index and Volkswagen
The main advantage of trading using opposite DAX Index and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| DAX Index vs. Gladstone Investment | DAX Index vs. REINET INVESTMENTS SCA | DAX Index vs. CarsalesCom | DAX Index vs. MARKET VECTR RETAIL |
| Volkswagen vs. Tesla Inc | Volkswagen vs. Toyota Motor | Volkswagen vs. Toyota Motor | Volkswagen vs. BYD Company Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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