Correlation Between Dow Jones and AXA World
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AXA World 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 AXA World 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 AXA World Funds, you can compare the effects of market volatilities on Dow Jones and AXA World 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 AXA World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AXA World.
Diversification Opportunities for Dow Jones and AXA World
Excellent diversification
The 3 months correlation between Dow and AXA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AXA World Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA World Funds 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 AXA World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA World Funds has no effect on the direction of Dow Jones i.e., Dow Jones and AXA World go up and down completely randomly.
Pair Corralation between Dow Jones and AXA World
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.43 times more return on investment than AXA World. However, Dow Jones is 1.43 times more volatile than AXA World Funds. It trades about 0.08 of its potential returns per unit of risk. AXA World Funds is currently generating about 0.03 per unit of risk. If you would invest 3,418,997 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,072,068 from holding Dow Jones Industrial or generate 31.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
Dow Jones Industrial vs. AXA World Funds
Performance |
| Timeline |
Dow Jones and AXA World Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AXA World Funds
Pair trading matchups for AXA World
Pair Trading with Dow Jones and AXA World
The main advantage of trading using opposite Dow Jones and AXA World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AXA World 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 AXA World will offset losses from the drop in AXA World's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| AXA World vs. AXA World Funds | AXA World vs. AXA World Funds | AXA World vs. Esfera Robotics R | AXA World vs. R co Valor F |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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