Correlation Between Dow Jones and Auden Techno
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Auden Techno 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 Auden Techno 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 Auden Techno, you can compare the effects of market volatilities on Dow Jones and Auden Techno 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 Auden Techno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Auden Techno.
Diversification Opportunities for Dow Jones and Auden Techno
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Auden is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Auden Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auden Techno 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 Auden Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auden Techno has no effect on the direction of Dow Jones i.e., Dow Jones and Auden Techno go up and down completely randomly.
Pair Corralation between Dow Jones and Auden Techno
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.29 times more return on investment than Auden Techno. However, Dow Jones Industrial is 3.41 times less risky than Auden Techno. It trades about 0.42 of its potential returns per unit of risk. Auden Techno is currently generating about -0.09 per unit of risk. If you would invest 4,239,227 in Dow Jones Industrial on November 2, 2024 and sell it today you would earn a total of 248,986 from holding Dow Jones Industrial or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Auden Techno
Performance |
| Timeline |
Dow Jones and Auden Techno Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dow Jones and Auden Techno
The main advantage of trading using opposite Dow Jones and Auden Techno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Auden Techno 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 Auden Techno will offset losses from the drop in Auden Techno's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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