Correlation Between Dow Jones and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Thyssenkrupp 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 Thyssenkrupp 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 Thyssenkrupp AG ON, you can compare the effects of market volatilities on Dow Jones and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Thyssenkrupp.
Diversification Opportunities for Dow Jones and Thyssenkrupp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Thyssenkrupp is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ON has no effect on the direction of Dow Jones i.e., Dow Jones and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Dow Jones and Thyssenkrupp
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Thyssenkrupp. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 4.68 times less risky than Thyssenkrupp. The index trades about -0.01 of its potential returns per unit of risk. The Thyssenkrupp AG ON is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Thyssenkrupp AG ON on September 12, 2024 and sell it today you would earn a total of 83.00 from holding Thyssenkrupp AG ON or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Thyssenkrupp AG ON
Performance |
| Timeline |
Dow Jones and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Thyssenkrupp AG ON
Pair trading matchups for Thyssenkrupp
Pair Trading with Dow Jones and Thyssenkrupp
The main advantage of trading using opposite Dow Jones and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Thyssenkrupp vs. Batm Advanced Communications | Thyssenkrupp vs. United Internet AG | Thyssenkrupp vs. Verizon Communications | Thyssenkrupp vs. PureTech Health plc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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