Correlation Between Dow Jones and APS Energia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and APS Energia 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 APS Energia 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 APS Energia SA, you can compare the effects of market volatilities on Dow Jones and APS Energia 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 APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and APS Energia.
Diversification Opportunities for Dow Jones and APS Energia
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and APS is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia 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 APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of Dow Jones i.e., Dow Jones and APS Energia go up and down completely randomly.
Pair Corralation between Dow Jones and APS Energia
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.24 times more return on investment than APS Energia. However, Dow Jones Industrial is 4.14 times less risky than APS Energia. It trades about 0.16 of its potential returns per unit of risk. APS Energia SA is currently generating about 0.02 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Dow Jones Industrial vs. APS Energia SA
Performance |
| Timeline |
Dow Jones and APS Energia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
APS Energia SA
Pair trading matchups for APS Energia
Pair Trading with Dow Jones and APS Energia
The main advantage of trading using opposite Dow Jones and APS Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, APS Energia 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 APS Energia will offset losses from the drop in APS Energia's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| APS Energia vs. LSI Software SA | APS Energia vs. Cloud Technologies SA | APS Energia vs. Quantum Software SA | APS Energia vs. Mlk Foods Public |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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