Correlation Between Dow Jones and SPAREBK 1
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SPAREBK 1 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 SPAREBK 1 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 SPAREBK 1 NORD NORGE, you can compare the effects of market volatilities on Dow Jones and SPAREBK 1 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 SPAREBK 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SPAREBK 1.
Diversification Opportunities for Dow Jones and SPAREBK 1
Very poor diversification
The 3 months correlation between Dow and SPAREBK is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SPAREBK 1 NORD NORGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAREBK 1 NORD 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 SPAREBK 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAREBK 1 NORD has no effect on the direction of Dow Jones i.e., Dow Jones and SPAREBK 1 go up and down completely randomly.
Pair Corralation between Dow Jones and SPAREBK 1
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the SPAREBK 1. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 2.04 times less risky than SPAREBK 1. The index trades about -0.01 of its potential returns per unit of risk. The SPAREBK 1 NORD NORGE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 988.00 in SPAREBK 1 NORD NORGE on September 12, 2024 and sell it today you would earn a total of 6.00 from holding SPAREBK 1 NORD NORGE or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. SPAREBK 1 NORD NORGE
Performance |
| Timeline |
Dow Jones and SPAREBK 1 Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SPAREBK 1 NORD NORGE
Pair trading matchups for SPAREBK 1
Pair Trading with Dow Jones and SPAREBK 1
The main advantage of trading using opposite Dow Jones and SPAREBK 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SPAREBK 1 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 SPAREBK 1 will offset losses from the drop in SPAREBK 1's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| SPAREBK 1 vs. Hemisphere Energy Corp | SPAREBK 1 vs. Spirent Communications plc | SPAREBK 1 vs. Singapore Telecommunications Limited | SPAREBK 1 vs. United Internet AG |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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