Correlation Between COFACE SA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both COFACE SA and Dow Jones 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 COFACE SA and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFACE SA and Dow Jones Industrial, you can compare the effects of market volatilities on COFACE SA and Dow Jones 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 COFACE SA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFACE SA and Dow Jones.
Diversification Opportunities for COFACE SA and Dow Jones
Good diversification
The 3 months correlation between COFACE and Dow is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding COFACE SA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and COFACE SA 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 COFACE SA are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of COFACE SA i.e., COFACE SA and Dow Jones go up and down completely randomly.
Pair Corralation between COFACE SA and Dow Jones
Assuming the 90 days horizon COFACE SA is expected to generate 1.49 times more return on investment than Dow Jones. However, COFACE SA is 1.49 times more volatile than Dow Jones Industrial. It trades about 0.35 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 1,412 in COFACE SA on October 28, 2024 and sell it today you would earn a total of 119.00 from holding COFACE SA or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
COFACE SA vs. Dow Jones Industrial
Performance |
| Timeline |
COFACE SA and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
COFACE SA
Pair trading matchups for COFACE SA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with COFACE SA and Dow Jones
The main advantage of trading using opposite COFACE SA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFACE SA position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| COFACE SA vs. NH Foods | COFACE SA vs. PURE FOODS TASMANIA | COFACE SA vs. MOLSON RS BEVERAGE | COFACE SA vs. PATTIES FOODS |
| Dow Jones vs. Turning Point Brands | Dow Jones vs. Weyco Group | Dow Jones vs. Willamette Valley Vineyards | Dow Jones vs. Compania Cervecerias Unidas |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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