Correlation Between DAX Index and Newtek Business
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By analyzing existing cross correlation between DAX Index and Newtek Business Services, you can compare the effects of market volatilities on DAX Index and Newtek Business 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 Newtek Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Newtek Business.
Diversification Opportunities for DAX Index and Newtek Business
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAX and Newtek is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services 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 Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of DAX Index i.e., DAX Index and Newtek Business go up and down completely randomly.
Pair Corralation between DAX Index and Newtek Business
Assuming the 90 days trading horizon DAX Index is expected to generate 0.39 times more return on investment than Newtek Business. However, DAX Index is 2.58 times less risky than Newtek Business. It trades about -0.04 of its potential returns per unit of risk. Newtek Business Services is currently generating about -0.09 per unit of risk. If you would invest 1,828,313 in DAX Index on January 30, 2024 and sell it today you would lose (12,212) from holding DAX Index or give up 0.67% 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. Newtek Business Services
Performance |
Timeline |
DAX Index and Newtek Business Volatility Contrast
Predicted Return Density |
Returns |
DAX Index
Pair trading matchups for DAX Index
Newtek Business Services
Pair trading matchups for Newtek Business
Pair Trading with DAX Index and Newtek Business
The main advantage of trading using opposite DAX Index and Newtek Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, Newtek Business 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 Newtek Business will offset losses from the drop in Newtek Business' long position.The idea behind DAX Index and Newtek Business Services 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.Newtek Business vs. SINGAPORE AIRLINES | Newtek Business vs. ELECTRONIC ARTS | Newtek Business vs. Singapore Airlines Limited | Newtek Business vs. Nucletron Electronic Aktiengesellschaft |
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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