Correlation Between Dow Jones and Thales
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Thales 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 Thales 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 Thales, you can compare the effects of market volatilities on Dow Jones and Thales 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 Thales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Thales.
Diversification Opportunities for Dow Jones and Thales
Weak diversification
The 3 months correlation between Dow and Thales is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Thales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales 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 Thales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales has no effect on the direction of Dow Jones i.e., Dow Jones and Thales go up and down completely randomly.
Pair Corralation between Dow Jones and Thales
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.46 times more return on investment than Thales. However, Dow Jones Industrial is 2.16 times less risky than Thales. It trades about 0.11 of its potential returns per unit of risk. Thales is currently generating about 0.02 per unit of risk. If you would invest 3,356,181 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,116,025 from holding Dow Jones Industrial or generate 33.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.75% |
| Values | Daily Returns |
Dow Jones Industrial vs. Thales
Performance |
| Timeline |
Dow Jones and Thales Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Thales
Pair trading matchups for Thales
Pair Trading with Dow Jones and Thales
The main advantage of trading using opposite Dow Jones and Thales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Thales 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 Thales will offset losses from the drop in Thales' long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Thales vs. Made Tech Group | Thales vs. Schweiter Technologies AG | Thales vs. Uber Technologies | Thales vs. Oakley Capital Investments |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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