Correlation Between Dow Jones and Agora SA
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Agora SA 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 Agora SA 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 Agora SA, you can compare the effects of market volatilities on Dow Jones and Agora SA 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 Agora SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Agora SA.
Diversification Opportunities for Dow Jones and Agora SA
Pay attention - limited upside
The 3 months correlation between Dow and Agora is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Agora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agora 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 Agora SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agora SA has no effect on the direction of Dow Jones i.e., Dow Jones and Agora SA go up and down completely randomly.
Pair Corralation between Dow Jones and Agora SA
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.51 times less return on investment than Agora SA. But when comparing it to its historical volatility, Dow Jones Industrial is 2.98 times less risky than Agora SA. It trades about 0.08 of its potential returns per unit of risk. Agora SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 473.00 in Agora SA on September 3, 2024 and sell it today you would earn a total of 397.00 from holding Agora SA or generate 83.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Agora SA
Performance |
| Timeline |
Dow Jones and Agora SA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Agora SA
Pair trading matchups for Agora SA
Pair Trading with Dow Jones and Agora SA
The main advantage of trading using opposite Dow Jones and Agora SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Agora SA 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 Agora SA will offset losses from the drop in Agora SA's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Agora SA vs. Banco Santander SA | Agora SA vs. UniCredit SpA | Agora SA vs. CEZ as | Agora SA vs. Polski Koncern Naftowy |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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