Correlation Between Proximus and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Proximus 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 Proximus and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proximus NV ADR and Dow Jones Industrial, you can compare the effects of market volatilities on Proximus 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 Proximus with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proximus and Dow Jones.
Diversification Opportunities for Proximus and Dow Jones
Average diversification
The 3 months correlation between Proximus and Dow is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Proximus NV ADR 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 Proximus 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 Proximus NV ADR 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 Proximus i.e., Proximus and Dow Jones go up and down completely randomly.
Pair Corralation between Proximus and Dow Jones
Assuming the 90 days horizon Proximus NV ADR is expected to generate 6.47 times more return on investment than Dow Jones. However, Proximus is 6.47 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.33 per unit of risk. If you would invest 110.00 in Proximus NV ADR on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Proximus NV ADR or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proximus NV ADR vs. Dow Jones Industrial
Performance |
| Timeline |
Proximus and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Proximus NV ADR
Pair trading matchups for Proximus
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Proximus and Dow Jones
The main advantage of trading using opposite Proximus and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proximus 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.| Proximus vs. Singapore Telecommunications Limited | Proximus vs. Telstra Limited | Proximus vs. MTN Group Ltd | Proximus vs. Tele2 AB |
| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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