Correlation Between Dow Jones and Biofrontera Warrants
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Biofrontera Warrants 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 Biofrontera Warrants 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 Biofrontera Warrants, you can compare the effects of market volatilities on Dow Jones and Biofrontera Warrants 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 Biofrontera Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Biofrontera Warrants.
Diversification Opportunities for Dow Jones and Biofrontera Warrants
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Biofrontera is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Biofrontera Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera Warrants 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 Biofrontera Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera Warrants has no effect on the direction of Dow Jones i.e., Dow Jones and Biofrontera Warrants go up and down completely randomly.
Pair Corralation between Dow Jones and Biofrontera Warrants
Assuming the 90 days trading horizon Dow Jones is expected to generate 95.53 times less return on investment than Biofrontera Warrants. But when comparing it to its historical volatility, Dow Jones Industrial is 92.13 times less risky than Biofrontera Warrants. It trades about 0.21 of its potential returns per unit of risk. Biofrontera Warrants is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Biofrontera Warrants on August 25, 2024 and sell it today you would earn a total of 3.39 from holding Biofrontera Warrants or generate 113.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Biofrontera Warrants
Performance |
| Timeline |
Dow Jones and Biofrontera Warrants Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Biofrontera Warrants
Pair trading matchups for Biofrontera Warrants
Pair Trading with Dow Jones and Biofrontera Warrants
The main advantage of trading using opposite Dow Jones and Biofrontera Warrants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Biofrontera Warrants 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 Biofrontera Warrants will offset losses from the drop in Biofrontera Warrants' long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Biofrontera Warrants vs. Biofrontera | Biofrontera Warrants vs. Pasithea Therapeutics Corp | Biofrontera Warrants vs. Inspira Technologies Oxy | Biofrontera Warrants vs. Bluejay Diagnostics |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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