Correlation Between Dow Jones and Azrieli
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Azrieli 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 Azrieli 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 Azrieli Group, you can compare the effects of market volatilities on Dow Jones and Azrieli 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 Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Azrieli.
Diversification Opportunities for Dow Jones and Azrieli
Poor diversification
The 3 months correlation between Dow and Azrieli is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group 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 Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of Dow Jones i.e., Dow Jones and Azrieli go up and down completely randomly.
Pair Corralation between Dow Jones and Azrieli
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.72 times less return on investment than Azrieli. But when comparing it to its historical volatility, Dow Jones Industrial is 2.74 times less risky than Azrieli. It trades about 0.18 of its potential returns per unit of risk. Azrieli Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,474,000 in Azrieli Group on August 28, 2024 and sell it today you would earn a total of 425,000 from holding Azrieli Group or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.43% |
| Values | Daily Returns |
Dow Jones Industrial vs. Azrieli Group
Performance |
| Timeline |
Dow Jones and Azrieli Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Azrieli Group
Pair trading matchups for Azrieli
Pair Trading with Dow Jones and Azrieli
The main advantage of trading using opposite Dow Jones and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Azrieli vs. Melisron | Azrieli vs. Bank Leumi Le Israel | Azrieli vs. Bank Hapoalim | Azrieli vs. Amot Investments |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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