Correlation Between Aedifica and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aedifica 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 Aedifica and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedifica SA and Dow Jones Industrial, you can compare the effects of market volatilities on Aedifica 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 Aedifica with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedifica and Dow Jones.
Diversification Opportunities for Aedifica and Dow Jones
Weak diversification
The 3 months correlation between Aedifica and Dow is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aedifica 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 Aedifica 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 Aedifica 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 Aedifica i.e., Aedifica and Dow Jones go up and down completely randomly.
Pair Corralation between Aedifica and Dow Jones
Assuming the 90 days horizon Aedifica SA is expected to under-perform the Dow Jones. In addition to that, Aedifica is 2.29 times more volatile than Dow Jones Industrial. It trades about -0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of volatility. If you would invest 3,736,112 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 738,651 from holding Dow Jones Industrial or generate 19.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedifica SA vs. Dow Jones Industrial
Performance |
| Timeline |
Aedifica and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aedifica SA
Pair trading matchups for Aedifica
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aedifica and Dow Jones
The main advantage of trading using opposite Aedifica and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedifica 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.| Aedifica vs. Summit Midstream | Aedifica vs. United Utilities Group | Aedifica vs. Suburban Propane Partners | Aedifica vs. Kenon Holdings |
| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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