Correlation Between AmerisourceBergen and Dow Jones
Can any of the company-specific risk be diversified away by investing in both AmerisourceBergen 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 AmerisourceBergen and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmerisourceBergen and Dow Jones Industrial, you can compare the effects of market volatilities on AmerisourceBergen 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 AmerisourceBergen with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmerisourceBergen and Dow Jones.
Diversification Opportunities for AmerisourceBergen and Dow Jones
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AmerisourceBergen and Dow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AmerisourceBergen 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 AmerisourceBergen 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 AmerisourceBergen 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 AmerisourceBergen i.e., AmerisourceBergen and Dow Jones go up and down completely randomly.
Pair Corralation between AmerisourceBergen and Dow Jones
If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
AmerisourceBergen vs. Dow Jones Industrial
Performance |
| Timeline |
AmerisourceBergen and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
AmerisourceBergen
Pair trading matchups for AmerisourceBergen
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with AmerisourceBergen and Dow Jones
The main advantage of trading using opposite AmerisourceBergen and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmerisourceBergen 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.| AmerisourceBergen vs. Cardinal Health | AmerisourceBergen vs. Henry Schein | AmerisourceBergen vs. Owens Minor | AmerisourceBergen vs. Patterson Companies |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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