Correlation Between Dow Jones and Carrefour
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Carrefour 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 Carrefour 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 Carrefour SA, you can compare the effects of market volatilities on Dow Jones and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Carrefour.
Diversification Opportunities for Dow Jones and Carrefour
Significant diversification
The 3 months correlation between Dow and Carrefour is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA 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 Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of Dow Jones i.e., Dow Jones and Carrefour go up and down completely randomly.
Pair Corralation between Dow Jones and Carrefour
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.54 times more return on investment than Carrefour. However, Dow Jones Industrial is 1.86 times less risky than Carrefour. It trades about 0.1 of its potential returns per unit of risk. Carrefour SA is currently generating about -0.02 per unit of risk. If you would invest 3,360,115 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 1,069,536 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.57% |
| Values | Daily Returns |
Dow Jones Industrial vs. Carrefour SA
Performance |
| Timeline |
Dow Jones and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Carrefour SA
Pair trading matchups for Carrefour
Pair Trading with Dow Jones and Carrefour
The main advantage of trading using opposite Dow Jones and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Carrefour vs. Danone SA | Carrefour vs. Renault SA | Carrefour vs. AXA SA | Carrefour vs. Compagnie de Saint Gobain |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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