Correlation Between Dow Jones and Aker Solutions
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aker Solutions 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 Aker Solutions 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 Aker Solutions ASA, you can compare the effects of market volatilities on Dow Jones and Aker Solutions 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 Aker Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aker Solutions.
Diversification Opportunities for Dow Jones and Aker Solutions
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Aker is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aker Solutions ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Solutions ASA 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 Aker Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Solutions ASA has no effect on the direction of Dow Jones i.e., Dow Jones and Aker Solutions go up and down completely randomly.
Pair Corralation between Dow Jones and Aker Solutions
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.13 times more return on investment than Aker Solutions. However, Dow Jones Industrial is 7.45 times less risky than Aker Solutions. It trades about 0.18 of its potential returns per unit of risk. Aker Solutions ASA is currently generating about -0.07 per unit of risk. If you would invest 4,109,142 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 376,889 from holding Dow Jones Industrial or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aker Solutions ASA
Performance |
| Timeline |
Dow Jones and Aker Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aker Solutions ASA
Pair trading matchups for Aker Solutions
Pair Trading with Dow Jones and Aker Solutions
The main advantage of trading using opposite Dow Jones and Aker Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aker Solutions 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 Aker Solutions will offset losses from the drop in Aker Solutions' 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 |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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