Correlation Between Dow Jones and Alzinova
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Alzinova 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 Alzinova 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 Alzinova AB, you can compare the effects of market volatilities on Dow Jones and Alzinova 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 Alzinova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Alzinova.
Diversification Opportunities for Dow Jones and Alzinova
Significant diversification
The 3 months correlation between Dow and Alzinova is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Alzinova AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alzinova AB 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 Alzinova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alzinova AB has no effect on the direction of Dow Jones i.e., Dow Jones and Alzinova go up and down completely randomly.
Pair Corralation between Dow Jones and Alzinova
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.63 times less return on investment than Alzinova. But when comparing it to its historical volatility, Dow Jones Industrial is 8.19 times less risky than Alzinova. It trades about 0.13 of its potential returns per unit of risk. Alzinova AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 321.00 in Alzinova AB on August 29, 2024 and sell it today you would earn a total of 61.00 from holding Alzinova AB or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Alzinova AB
Performance |
| Timeline |
Dow Jones and Alzinova Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Alzinova AB
Pair trading matchups for Alzinova
Pair Trading with Dow Jones and Alzinova
The main advantage of trading using opposite Dow Jones and Alzinova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Alzinova 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 Alzinova will offset losses from the drop in Alzinova's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Alzinova vs. AlzeCure Pharma | Alzinova vs. BioArctic AB | Alzinova vs. Cantargia AB | Alzinova vs. Diamyd Medical AB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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