Correlation Between Dow Jones and Metro AG
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on Dow Jones and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Metro AG.
Diversification Opportunities for Dow Jones and Metro AG
Excellent diversification
The 3 months correlation between Dow and Metro is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Dow Jones i.e., Dow Jones and Metro AG go up and down completely randomly.
Pair Corralation between Dow Jones and Metro AG
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.37 times more return on investment than Metro AG. However, Dow Jones Industrial is 2.72 times less risky than Metro AG. It trades about 0.07 of its potential returns per unit of risk. Metro AG is currently generating about -0.06 per unit of risk. If you would invest 3,322,080 in Dow Jones Industrial on September 19, 2024 and sell it today you would earn a total of 910,607 from holding Dow Jones Industrial or generate 27.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Dow Jones Industrial vs. Metro AG
Performance |
| Timeline |
Dow Jones and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Metro AG
Pair trading matchups for Metro AG
Pair Trading with Dow Jones and Metro AG
The main advantage of trading using opposite Dow Jones and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
| Metro AG vs. Metro AG | Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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