Correlation Between DAX Index and AvalonBay Communities
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By analyzing existing cross correlation between DAX Index and AvalonBay Communities, you can compare the effects of market volatilities on DAX Index and AvalonBay Communities 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 AvalonBay Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and AvalonBay Communities.
Diversification Opportunities for DAX Index and AvalonBay Communities
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DAX and AvalonBay is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and AvalonBay Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvalonBay Communities 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 AvalonBay Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvalonBay Communities has no effect on the direction of DAX Index i.e., DAX Index and AvalonBay Communities go up and down completely randomly.
Pair Corralation between DAX Index and AvalonBay Communities
Assuming the 90 days trading horizon DAX Index is expected to generate 1.15 times less return on investment than AvalonBay Communities. But when comparing it to its historical volatility, DAX Index is 1.57 times less risky than AvalonBay Communities. It trades about 0.09 of its potential returns per unit of risk. AvalonBay Communities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14,684 in AvalonBay Communities on September 5, 2024 and sell it today you would earn a total of 7,051 from holding AvalonBay Communities or generate 48.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. AvalonBay Communities
Performance |
| Timeline |
DAX Index and AvalonBay Communities Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
AvalonBay Communities
Pair trading matchups for AvalonBay Communities
Pair Trading with DAX Index and AvalonBay Communities
The main advantage of trading using opposite DAX Index and AvalonBay Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, AvalonBay Communities 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 AvalonBay Communities will offset losses from the drop in AvalonBay Communities' long position.| DAX Index vs. Hochschild Mining plc | DAX Index vs. Ming Le Sports | DAX Index vs. PLAYSTUDIOS A DL 0001 | DAX Index vs. USWE SPORTS AB |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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