Correlation Between Dow Jones and Sibanye Stillwater
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Sibanye Stillwater 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 Sibanye Stillwater 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 Sibanye Stillwater Limited, you can compare the effects of market volatilities on Dow Jones and Sibanye Stillwater 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 Sibanye Stillwater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Sibanye Stillwater.
Diversification Opportunities for Dow Jones and Sibanye Stillwater
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Sibanye is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of Dow Jones i.e., Dow Jones and Sibanye Stillwater go up and down completely randomly.
Pair Corralation between Dow Jones and Sibanye Stillwater
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.25 times more return on investment than Sibanye Stillwater. However, Dow Jones Industrial is 4.02 times less risky than Sibanye Stillwater. It trades about 0.37 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about -0.13 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Sibanye Stillwater Limited
Performance |
| Timeline |
Dow Jones and Sibanye Stillwater Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Sibanye Stillwater Limited
Pair trading matchups for Sibanye Stillwater
Pair Trading with Dow Jones and Sibanye Stillwater
The main advantage of trading using opposite Dow Jones and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Sibanye Stillwater vs. Playtech plc | Sibanye Stillwater vs. UNITED UTILITIES GR | Sibanye Stillwater vs. Major Drilling Group | Sibanye Stillwater vs. Algonquin Power Utilities |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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