Correlation Between Dow Jones and Pandora A/S
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pandora A/S 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 Pandora A/S 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 Pandora AS, you can compare the effects of market volatilities on Dow Jones and Pandora A/S 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 Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pandora A/S.
Diversification Opportunities for Dow Jones and Pandora A/S
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Pandora is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S 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 Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of Dow Jones i.e., Dow Jones and Pandora A/S go up and down completely randomly.
Pair Corralation between Dow Jones and Pandora A/S
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.99 times less return on investment than Pandora A/S. But when comparing it to its historical volatility, Dow Jones Industrial is 2.24 times less risky than Pandora A/S. It trades about 0.1 of its potential returns per unit of risk. Pandora AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,020 in Pandora AS on September 26, 2024 and sell it today you would earn a total of 3,000 from holding Pandora AS or generate 21.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pandora AS
Performance |
| Timeline |
Dow Jones and Pandora A/S Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pandora AS
Pair trading matchups for Pandora A/S
Pair Trading with Dow Jones and Pandora A/S
The main advantage of trading using opposite Dow Jones and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
| Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. Herms International Socit | Pandora A/S vs. CHRISTIAN DIOR ADR14EO2 | Pandora A/S vs. Christian Dior SE |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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