Correlation Between Dow Jones and Swedish Orphan
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Swedish Orphan 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 Swedish Orphan 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 Swedish Orphan Biovitrum, you can compare the effects of market volatilities on Dow Jones and Swedish Orphan 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 Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Swedish Orphan.
Diversification Opportunities for Dow Jones and Swedish Orphan
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Swedish is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum 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 Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Dow Jones i.e., Dow Jones and Swedish Orphan go up and down completely randomly.
Pair Corralation between Dow Jones and Swedish Orphan
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.03 times less return on investment than Swedish Orphan. But when comparing it to its historical volatility, Dow Jones Industrial is 2.73 times less risky than Swedish Orphan. It trades about 0.1 of its potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,486 in Swedish Orphan Biovitrum on September 27, 2024 and sell it today you would earn a total of 200.00 from holding Swedish Orphan Biovitrum or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Swedish Orphan Biovitrum
Performance |
| Timeline |
Dow Jones and Swedish Orphan Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Swedish Orphan Biovitrum
Pair trading matchups for Swedish Orphan
Pair Trading with Dow Jones and Swedish Orphan
The main advantage of trading using opposite Dow Jones and Swedish Orphan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Swedish Orphan 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 Swedish Orphan will offset losses from the drop in Swedish Orphan's long position.| Dow Jones vs. Copa Holdings SA | Dow Jones vs. Delta Air Lines | Dow Jones vs. Azul SA | Dow Jones vs. SkyWest |
| Swedish Orphan vs. Zoetis Inc | Swedish Orphan vs. Takeda Pharmaceutical | Swedish Orphan vs. Eisai Co | Swedish Orphan vs. Catalent |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |