Correlation Between Dow Jones and Koninklijke BAM
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Koninklijke BAM 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 Koninklijke BAM 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 Koninklijke BAM Groep, you can compare the effects of market volatilities on Dow Jones and Koninklijke BAM 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 Koninklijke BAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Koninklijke BAM.
Diversification Opportunities for Dow Jones and Koninklijke BAM
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Koninklijke is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Koninklijke BAM Groep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke BAM Groep 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 Koninklijke BAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke BAM Groep has no effect on the direction of Dow Jones i.e., Dow Jones and Koninklijke BAM go up and down completely randomly.
Pair Corralation between Dow Jones and Koninklijke BAM
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.58 times more return on investment than Koninklijke BAM. However, Dow Jones Industrial is 1.72 times less risky than Koninklijke BAM. It trades about 0.33 of its potential returns per unit of risk. Koninklijke BAM Groep is currently generating about -0.15 per unit of risk. If you would invest 4,239,227 in Dow Jones Industrial on November 3, 2024 and sell it today you would earn a total of 215,239 from holding Dow Jones Industrial or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Koninklijke BAM Groep
Performance |
| Timeline |
Dow Jones and Koninklijke BAM Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Koninklijke BAM Groep
Pair trading matchups for Koninklijke BAM
Pair Trading with Dow Jones and Koninklijke BAM
The main advantage of trading using opposite Dow Jones and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Koninklijke BAM 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 Koninklijke BAM will offset losses from the drop in Koninklijke BAM's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| Koninklijke BAM vs. Fugro NV | Koninklijke BAM vs. SBM Offshore NV | Koninklijke BAM vs. Aegon NV | Koninklijke BAM vs. PostNL NV |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |