Correlation Between DAX Index and EX PACK

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

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

Diversification Opportunities for DAX Index and EX PACK

-0.3

Correlation Coefficient

DAX Index  EX PACK

Very good diversification

The 3 months correlation between DAX and PACKN0000 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and EX PACK RUGATED CARTONS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EX PACK RUGATED 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 EX PACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EX PACK RUGATED has no effect on the direction of DAX Index i.e., DAX Index and EX PACK go up and down completely randomly.

Pair Corralation between DAX Index and EX PACK

Assuming the 90 days trading horizon DAX Index is expected to generate 0.53 times more return on investment than EX PACK. However, DAX Index is 1.89 times less risky than EX PACK. It trades about 0.17 of its potential returns per unit of risk. EX PACK RUGATED CARTONS is currently generating about 0.03 per unit of risk. If you would invest  2,035,880  in DAX Index on December 5, 2024 and sell it today you would earn a total of  196,801  from holding DAX Index or generate 9.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

DAX Index  vs.  EX PACK RUGATED CARTONS

Pair Trading with DAX Index and EX PACK

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

The idea behind DAX Index and EX PACK RUGATED CARTONS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.