Correlation Between DAX Index and Fastly
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By analyzing existing cross correlation between DAX Index and Fastly Inc, you can compare the effects of market volatilities on DAX Index and Fastly 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 Fastly. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Fastly.
Diversification Opportunities for DAX Index and Fastly
Poor diversification
The 3 months correlation between DAX and Fastly is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Fastly Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastly 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 Fastly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastly Inc has no effect on the direction of DAX Index i.e., DAX Index and Fastly go up and down completely randomly.
Pair Corralation between DAX Index and Fastly
Assuming the 90 days trading horizon DAX Index is expected to generate 0.1 times more return on investment than Fastly. However, DAX Index is 10.1 times less risky than Fastly. It trades about -0.12 of its potential returns per unit of risk. Fastly Inc is currently generating about -0.03 per unit of risk. If you would invest 2,023,214 in DAX Index on October 5, 2024 and sell it today you would lose (20,748) from holding DAX Index or give up 1.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
DAX Index vs. Fastly Inc
Performance |
Timeline |
DAX Index and Fastly Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DAX Index and Fastly
The main advantage of trading using opposite DAX Index and Fastly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Fastly 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 Fastly will offset losses from the drop in Fastly's long position.The idea behind DAX Index and Fastly 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.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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