Correlation Between Dow Jones and BB Biotech
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By analyzing existing cross correlation between Dow Jones Industrial and BB Biotech AG, you can compare the effects of market volatilities on Dow Jones and BB Biotech 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 BB Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and BB Biotech.
Diversification Opportunities for Dow Jones and BB Biotech
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and BBZA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BB Biotech AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Biotech 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 BB Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Biotech AG has no effect on the direction of Dow Jones i.e., Dow Jones and BB Biotech go up and down completely randomly.
Pair Corralation between Dow Jones and BB Biotech
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.48 times more return on investment than BB Biotech. However, Dow Jones Industrial is 2.06 times less risky than BB Biotech. It trades about 0.1 of its potential returns per unit of risk. BB Biotech AG is currently generating about -0.02 per unit of risk. If you would invest 3,181,914 in Dow Jones Industrial on December 1, 2024 and sell it today you would earn a total of 1,202,177 from holding Dow Jones Industrial or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. BB Biotech AG
Performance |
| Timeline |
Dow Jones and BB Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
BB Biotech AG
Pair trading matchups for BB Biotech
Pair Trading with Dow Jones and BB Biotech
The main advantage of trading using opposite Dow Jones and BB Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, BB Biotech 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 BB Biotech will offset losses from the drop in BB Biotech's long position.| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
| BB Biotech vs. ULTRA CLEAN HLDGS | BB Biotech vs. MagnaChip Semiconductor Corp | BB Biotech vs. ASPEN TECHINC DL | BB Biotech vs. CVW CLEANTECH INC |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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