Correlation Between CIA ENGER and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CIA ENGER 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 CIA ENGER and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIA ENGER ADR and Dow Jones Industrial, you can compare the effects of market volatilities on CIA ENGER 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 CIA ENGER with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIA ENGER and Dow Jones.
Diversification Opportunities for CIA ENGER and Dow Jones
Average diversification
The 3 months correlation between CIA and Dow is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CIA ENGER 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 CIA ENGER 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 CIA ENGER 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 CIA ENGER i.e., CIA ENGER and Dow Jones go up and down completely randomly.
Pair Corralation between CIA ENGER and Dow Jones
Assuming the 90 days trading horizon CIA ENGER is expected to generate 1.55 times less return on investment than Dow Jones. But when comparing it to its historical volatility, CIA ENGER ADR is 2.2 times less risky than Dow Jones. It trades about 0.24 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,234,224 in Dow Jones Industrial on October 20, 2024 and sell it today you would earn a total of 114,559 from holding Dow Jones Industrial or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
CIA ENGER ADR vs. Dow Jones Industrial
Performance |
| Timeline |
CIA ENGER and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
CIA ENGER ADR
Pair trading matchups for CIA ENGER
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with CIA ENGER and Dow Jones
The main advantage of trading using opposite CIA ENGER and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIA ENGER 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.| CIA ENGER vs. IBERDROLA ADR1 EO | CIA ENGER vs. SSE PLC ADR | CIA ENGER vs. C PARAN EN | CIA ENGER vs. Companhia Energtica de |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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