Correlation Between ALLEGROEU and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ALLEGROEU 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 ALLEGROEU and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALLEGROEU ZY 01 and Dow Jones Industrial, you can compare the effects of market volatilities on ALLEGROEU 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 ALLEGROEU with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLEGROEU and Dow Jones.
Diversification Opportunities for ALLEGROEU and Dow Jones
Pay attention - limited upside
The 3 months correlation between ALLEGROEU and Dow is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ALLEGROEU ZY 01 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 ALLEGROEU 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 ALLEGROEU ZY 01 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 ALLEGROEU i.e., ALLEGROEU and Dow Jones go up and down completely randomly.
Pair Corralation between ALLEGROEU and Dow Jones
Assuming the 90 days trading horizon ALLEGROEU ZY 01 is expected to under-perform the Dow Jones. In addition to that, ALLEGROEU is 4.88 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.01 per unit of volatility. If you would invest 4,429,313 in Dow Jones Industrial on September 12, 2024 and sell it today you would lose (4,530) from holding Dow Jones Industrial or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
ALLEGROEU ZY 01 vs. Dow Jones Industrial
Performance |
| Timeline |
ALLEGROEU and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ALLEGROEU ZY 01
Pair trading matchups for ALLEGROEU
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ALLEGROEU and Dow Jones
The main advantage of trading using opposite ALLEGROEU and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLEGROEU 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.| ALLEGROEU vs. Entravision Communications | ALLEGROEU vs. SBM OFFSHORE | ALLEGROEU vs. RYU Apparel | ALLEGROEU vs. Mobilezone Holding AG |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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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