Correlation Between Dow Jones and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Prosiebensat 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 Prosiebensat 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 Prosiebensat 1 Media, you can compare the effects of market volatilities on Dow Jones and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Prosiebensat.
Diversification Opportunities for Dow Jones and Prosiebensat
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Prosiebensat is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Dow Jones i.e., Dow Jones and Prosiebensat go up and down completely randomly.
Pair Corralation between Dow Jones and Prosiebensat
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.25 times more return on investment than Prosiebensat. However, Dow Jones Industrial is 3.99 times less risky than Prosiebensat. It trades about 0.13 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about -0.02 per unit of risk. If you would invest 3,620,444 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 865,587 from holding Dow Jones Industrial or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. Prosiebensat 1 Media
Performance |
| Timeline |
Dow Jones and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Prosiebensat 1 Media
Pair trading matchups for Prosiebensat
Pair Trading with Dow Jones and Prosiebensat
The main advantage of trading using opposite Dow Jones and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Prosiebensat vs. Lendinvest PLC | Prosiebensat vs. Neometals | Prosiebensat vs. Coor Service Management | Prosiebensat vs. Albion Technology General |
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 Stocks Directory module to find actively traded stocks across global markets.
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