Correlation Between Dow Jones and Boozt AB
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Boozt AB 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 Boozt AB 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 Boozt AB, you can compare the effects of market volatilities on Dow Jones and Boozt AB 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 Boozt AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Boozt AB.
Diversification Opportunities for Dow Jones and Boozt AB
Significant diversification
The 3 months correlation between Dow and Boozt is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Boozt AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boozt AB 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 Boozt AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boozt AB has no effect on the direction of Dow Jones i.e., Dow Jones and Boozt AB go up and down completely randomly.
Pair Corralation between Dow Jones and Boozt AB
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.51 times less return on investment than Boozt AB. But when comparing it to its historical volatility, Dow Jones Industrial is 3.99 times less risky than Boozt AB. It trades about 0.15 of its potential returns per unit of risk. Boozt AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,920 in Boozt AB on September 1, 2024 and sell it today you would earn a total of 3,080 from holding Boozt AB or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.26% |
| Values | Daily Returns |
Dow Jones Industrial vs. Boozt AB
Performance |
| Timeline |
Dow Jones and Boozt AB Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Boozt AB
Pair trading matchups for Boozt AB
Pair Trading with Dow Jones and Boozt AB
The main advantage of trading using opposite Dow Jones and Boozt AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Boozt AB 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 Boozt AB will offset losses from the drop in Boozt AB's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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