Correlation Between Dow Jones and Cencosud
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By analyzing existing cross correlation between Dow Jones Industrial and Cencosud, you can compare the effects of market volatilities on Dow Jones and Cencosud 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 Cencosud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Cencosud.
Diversification Opportunities for Dow Jones and Cencosud
Average diversification
The 3 months correlation between Dow and Cencosud is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Cencosud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencosud 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 Cencosud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencosud has no effect on the direction of Dow Jones i.e., Dow Jones and Cencosud go up and down completely randomly.
Pair Corralation between Dow Jones and Cencosud
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.9 times less return on investment than Cencosud. But when comparing it to its historical volatility, Dow Jones Industrial is 1.71 times less risky than Cencosud. It trades about 0.29 of its potential returns per unit of risk. Cencosud is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 219,000 in Cencosud on November 4, 2024 and sell it today you would earn a total of 31,000 from holding Cencosud or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. Cencosud
Performance |
| Timeline |
Dow Jones and Cencosud Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Cencosud
Pair trading matchups for Cencosud
Pair Trading with Dow Jones and Cencosud
The main advantage of trading using opposite Dow Jones and Cencosud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Cencosud 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 Cencosud will offset losses from the drop in Cencosud's long position.The idea behind Dow Jones Industrial and Cencosud pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cencosud vs. Falabella | Cencosud vs. Empresas Copec SA | Cencosud vs. Sociedad Qumica y | Cencosud vs. Banco Santander Chile |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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