Correlation Between Dow Jones and Electrolux Professional
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Electrolux Professional 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 Electrolux Professional 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 Electrolux Professional AB, you can compare the effects of market volatilities on Dow Jones and Electrolux Professional 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 Electrolux Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Electrolux Professional.
Diversification Opportunities for Dow Jones and Electrolux Professional
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Electrolux is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Electrolux Professional AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrolux Professional 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 Electrolux Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrolux Professional has no effect on the direction of Dow Jones i.e., Dow Jones and Electrolux Professional go up and down completely randomly.
Pair Corralation between Dow Jones and Electrolux Professional
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.84 times less return on investment than Electrolux Professional. But when comparing it to its historical volatility, Dow Jones Industrial is 3.59 times less risky than Electrolux Professional. It trades about 0.08 of its potential returns per unit of risk. Electrolux Professional AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 308.00 in Electrolux Professional AB on September 3, 2024 and sell it today you would earn a total of 292.00 from holding Electrolux Professional AB or generate 94.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Dow Jones Industrial vs. Electrolux Professional AB
Performance |
| Timeline |
Dow Jones and Electrolux Professional Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Electrolux Professional AB
Pair trading matchups for Electrolux Professional
Pair Trading with Dow Jones and Electrolux Professional
The main advantage of trading using opposite Dow Jones and Electrolux Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Electrolux Professional 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 Electrolux Professional will offset losses from the drop in Electrolux Professional's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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