Correlation Between Dow Jones and AmerisourceBergen
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AmerisourceBergen 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 AmerisourceBergen 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 AmerisourceBergen, you can compare the effects of market volatilities on Dow Jones and AmerisourceBergen 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 AmerisourceBergen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AmerisourceBergen.
Diversification Opportunities for Dow Jones and AmerisourceBergen
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and AmerisourceBergen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen 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 AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of Dow Jones i.e., Dow Jones and AmerisourceBergen go up and down completely randomly.
Pair Corralation between Dow Jones and AmerisourceBergen
If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Dow Jones Industrial vs. AmerisourceBergen
Performance |
| Timeline |
Dow Jones and AmerisourceBergen Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AmerisourceBergen
Pair trading matchups for AmerisourceBergen
Pair Trading with Dow Jones and AmerisourceBergen
The main advantage of trading using opposite Dow Jones and AmerisourceBergen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AmerisourceBergen 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 AmerisourceBergen will offset losses from the drop in AmerisourceBergen's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| AmerisourceBergen vs. Cardinal Health | AmerisourceBergen vs. Henry Schein | AmerisourceBergen vs. Owens Minor | AmerisourceBergen vs. Patterson Companies |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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