Correlation Between Absa and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Absa 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 Absa and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group and Dow Jones Industrial, you can compare the effects of market volatilities on Absa 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 Absa with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa and Dow Jones.
Diversification Opportunities for Absa and Dow Jones
Modest diversification
The 3 months correlation between Absa and Dow is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group 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 Absa 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 Absa Group 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 Absa i.e., Absa and Dow Jones go up and down completely randomly.
Pair Corralation between Absa and Dow Jones
Assuming the 90 days trading horizon Absa is expected to generate 1.13 times less return on investment than Dow Jones. In addition to that, Absa is 2.42 times more volatile than Dow Jones Industrial. It trades about 0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Absa Group vs. Dow Jones Industrial
Performance |
| Timeline |
Absa and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Absa Group
Pair trading matchups for Absa
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Absa and Dow Jones
The main advantage of trading using opposite Absa and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa 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.| Absa vs. eMedia Holdings Limited | Absa vs. We Buy Cars | Absa vs. Frontier Transport Holdings | Absa vs. HomeChoice Investments |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |