Correlation Between Dow Jones and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AstraZeneca PLC 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 Dow Jones and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and AstraZeneca PLC ADR, you can compare the effects of market volatilities on Dow Jones and AstraZeneca PLC 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 Dow Jones with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AstraZeneca PLC.
Diversification Opportunities for Dow Jones and AstraZeneca PLC
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and AstraZeneca is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Dow Jones i.e., Dow Jones and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Dow Jones and AstraZeneca PLC
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.83 times less return on investment than AstraZeneca PLC. But when comparing it to its historical volatility, Dow Jones Industrial is 1.17 times less risky than AstraZeneca PLC. It trades about 0.1 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,523 in AstraZeneca PLC ADR on October 23, 2024 and sell it today you would earn a total of 155.00 from holding AstraZeneca PLC ADR or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Dow Jones Industrial vs. AstraZeneca PLC ADR
Performance |
| Timeline |
Dow Jones and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AstraZeneca PLC ADR
Pair trading matchups for AstraZeneca PLC
Pair Trading with Dow Jones and AstraZeneca PLC
The main advantage of trading using opposite Dow Jones and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
| AstraZeneca PLC vs. Qurate Retail Series | AstraZeneca PLC vs. Evolution Gaming Group | AstraZeneca PLC vs. Ross Stores | AstraZeneca PLC vs. Wizz Air Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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