Correlation Between ConvaTec Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ConvaTec Group 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 ConvaTec Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConvaTec Group Plc and Dow Jones Industrial, you can compare the effects of market volatilities on ConvaTec Group 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 ConvaTec Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConvaTec Group and Dow Jones.
Diversification Opportunities for ConvaTec Group and Dow Jones
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ConvaTec and Dow is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ConvaTec Group Plc 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 ConvaTec Group 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 ConvaTec Group Plc 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 ConvaTec Group i.e., ConvaTec Group and Dow Jones go up and down completely randomly.
Pair Corralation between ConvaTec Group and Dow Jones
Assuming the 90 days horizon ConvaTec Group Plc is expected to generate 6.86 times more return on investment than Dow Jones. However, ConvaTec Group is 6.86 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 271.00 in ConvaTec Group Plc on September 1, 2024 and sell it today you would earn a total of 24.00 from holding ConvaTec Group Plc or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ConvaTec Group Plc vs. Dow Jones Industrial
Performance |
| Timeline |
ConvaTec Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ConvaTec Group Plc
Pair trading matchups for ConvaTec Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ConvaTec Group and Dow Jones
The main advantage of trading using opposite ConvaTec Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConvaTec Group 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.| ConvaTec Group vs. Usio Inc | ConvaTec Group vs. Analog Devices | ConvaTec Group vs. Q2 Holdings | ConvaTec Group vs. Evertz Technologies Limited |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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