Correlation Between Dow Jones and Absa Multi
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By analyzing existing cross correlation between Dow Jones Industrial and Absa Multi Managed, you can compare the effects of market volatilities on Dow Jones and Absa Multi 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 Absa Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Absa Multi.
Diversification Opportunities for Dow Jones and Absa Multi
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Absa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Absa Multi Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Multi Managed 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 Absa Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Multi Managed has no effect on the direction of Dow Jones i.e., Dow Jones and Absa Multi go up and down completely randomly.
Pair Corralation between Dow Jones and Absa Multi
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.46 times more return on investment than Absa Multi. However, Dow Jones is 2.46 times more volatile than Absa Multi Managed. It trades about 0.15 of its potential returns per unit of risk. Absa Multi Managed is currently generating about 0.21 per unit of risk. If you would invest 3,879,899 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 590,654 from holding Dow Jones Industrial or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Absa Multi Managed
Performance |
| Timeline |
Dow Jones and Absa Multi Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Absa Multi Managed
Pair trading matchups for Absa Multi
Pair Trading with Dow Jones and Absa Multi
The main advantage of trading using opposite Dow Jones and Absa Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Absa Multi 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 Absa Multi will offset losses from the drop in Absa Multi's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Absa Multi vs. Sasol Ltd Bee | Absa Multi vs. Centaur Bci Balanced | Absa Multi vs. Sabvest Capital | Absa Multi vs. Growthpoint Properties |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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