Correlation Between DAX Index and CH Robinson

Can any of the company-specific risk be diversified away by investing in both DAX Index and CH Robinson 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 CH Robinson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAX Index and CH Robinson Worldwide, you can compare the effects of market volatilities on DAX Index and CH Robinson 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 CH Robinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and CH Robinson.

Diversification Opportunities for DAX Index and CH Robinson

0.29

Correlation Coefficient

DAX Index  CH Robinson

Modest diversification

The 3 months correlation between DAX and CH1A is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and CH Robinson Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Robinson Worldwide 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 CH Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Robinson Worldwide has no effect on the direction of DAX Index i.e., DAX Index and CH Robinson go up and down completely randomly.

Pair Corralation between DAX Index and CH Robinson

Assuming the 90 days trading horizon DAX Index is expected to generate 1.82 times less return on investment than CH Robinson. But when comparing it to its historical volatility, DAX Index is 2.47 times less risky than CH Robinson. It trades about 0.13 of its potential returns per unit of risk. CH Robinson Worldwide is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,997  in CH Robinson Worldwide on October 20, 2024 and sell it today you would earn a total of  1,903  from holding CH Robinson Worldwide or generate 23.8% 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.  CH Robinson Worldwide

Pair Trading with DAX Index and CH Robinson

The main advantage of trading using opposite DAX Index and CH Robinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, CH Robinson 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 CH Robinson will offset losses from the drop in CH Robinson's long position.

The idea behind DAX Index and CH Robinson Worldwide 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.