Correlation Between Dow Jones and Amoeba SA
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amoeba 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 Amoeba 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 Amoeba SA, you can compare the effects of market volatilities on Dow Jones and Amoeba 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 Amoeba SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amoeba SA.
Diversification Opportunities for Dow Jones and Amoeba SA
Poor diversification
The 3 months correlation between Dow and Amoeba is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amoeba SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amoeba 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 Amoeba SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amoeba SA has no effect on the direction of Dow Jones i.e., Dow Jones and Amoeba SA go up and down completely randomly.
Pair Corralation between Dow Jones and Amoeba SA
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.48 times less return on investment than Amoeba SA. But when comparing it to its historical volatility, Dow Jones Industrial is 3.67 times less risky than Amoeba SA. It trades about 0.34 of its potential returns per unit of risk. Amoeba SA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Amoeba SA on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Amoeba SA or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amoeba SA
Performance |
| Timeline |
Dow Jones and Amoeba SA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amoeba SA
Pair trading matchups for Amoeba SA
Pair Trading with Dow Jones and Amoeba SA
The main advantage of trading using opposite Dow Jones and Amoeba SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amoeba 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 Amoeba SA will offset losses from the drop in Amoeba SA's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Amoeba SA vs. Gaussin | Amoeba SA vs. Blockchain Group SA | Amoeba SA vs. Drone Volt SA | Amoeba SA vs. Gensight Biologics SA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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