Correlation Between Dow Jones and AMAG Austria
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AMAG Austria 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 AMAG Austria 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 AMAG Austria Metall, you can compare the effects of market volatilities on Dow Jones and AMAG Austria 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 AMAG Austria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AMAG Austria.
Diversification Opportunities for Dow Jones and AMAG Austria
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and AMAG is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall 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 AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of Dow Jones i.e., Dow Jones and AMAG Austria go up and down completely randomly.
Pair Corralation between Dow Jones and AMAG Austria
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the AMAG Austria. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 3.09 times less risky than AMAG Austria. The index trades about -0.21 of its potential returns per unit of risk. The AMAG Austria Metall is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,270 in AMAG Austria Metall on September 26, 2024 and sell it today you would earn a total of 120.00 from holding AMAG Austria Metall or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. AMAG Austria Metall
Performance |
| Timeline |
Dow Jones and AMAG Austria Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AMAG Austria Metall
Pair trading matchups for AMAG Austria
Pair Trading with Dow Jones and AMAG Austria
The main advantage of trading using opposite Dow Jones and AMAG Austria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AMAG Austria 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 AMAG Austria will offset losses from the drop in AMAG Austria's long position.| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
| AMAG Austria vs. Norsk Hydro ASA | AMAG Austria vs. Norsk Hydro ASA | AMAG Austria vs. Alcoa Corp | AMAG Austria vs. Kaiser Aluminum |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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