Correlation Between Dow Jones and CaixaBank
Can any of the company-specific risk be diversified away by investing in both Dow Jones and CaixaBank 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 CaixaBank 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 CaixaBank SA, you can compare the effects of market volatilities on Dow Jones and CaixaBank 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 CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and CaixaBank.
Diversification Opportunities for Dow Jones and CaixaBank
Significant diversification
The 3 months correlation between Dow and CaixaBank is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA 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 CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of Dow Jones i.e., Dow Jones and CaixaBank go up and down completely randomly.
Pair Corralation between Dow Jones and CaixaBank
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.94 times less return on investment than CaixaBank. But when comparing it to its historical volatility, Dow Jones Industrial is 2.6 times less risky than CaixaBank. It trades about 0.08 of its potential returns per unit of risk. CaixaBank SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 325.00 in CaixaBank SA on September 28, 2024 and sell it today you would earn a total of 182.00 from holding CaixaBank SA or generate 56.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.61% |
| Values | Daily Returns |
Dow Jones Industrial vs. CaixaBank SA
Performance |
| Timeline |
Dow Jones and CaixaBank Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
CaixaBank SA
Pair trading matchups for CaixaBank
Pair Trading with Dow Jones and CaixaBank
The main advantage of trading using opposite Dow Jones and CaixaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, CaixaBank 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 CaixaBank will offset losses from the drop in CaixaBank's long position.| Dow Jones vs. Copa Holdings SA | Dow Jones vs. Delta Air Lines | Dow Jones vs. Azul SA | Dow Jones vs. SkyWest |
| CaixaBank vs. BNP PARIBAS ADR | CaixaBank vs. Intesa Sanpaolo SpA | CaixaBank vs. Lloyds Banking Group | CaixaBank vs. Lloyds Banking Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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