Correlation Between Dow Jones and Compagnie Financire
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Compagnie Financire 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 Compagnie Financire 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 Compagnie Financire Richemont, you can compare the effects of market volatilities on Dow Jones and Compagnie Financire 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 Compagnie Financire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Compagnie Financire.
Diversification Opportunities for Dow Jones and Compagnie Financire
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Compagnie is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire 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 Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of Dow Jones i.e., Dow Jones and Compagnie Financire go up and down completely randomly.
Pair Corralation between Dow Jones and Compagnie Financire
Assuming the 90 days trading horizon Dow Jones is expected to generate 17.03 times less return on investment than Compagnie Financire. But when comparing it to its historical volatility, Dow Jones Industrial is 5.6 times less risky than Compagnie Financire. It trades about 0.1 of its potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 13,610 in Compagnie Financire Richemont on October 23, 2024 and sell it today you would earn a total of 2,795 from holding Compagnie Financire Richemont or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Compagnie Financire Richemont
Performance |
| Timeline |
Dow Jones and Compagnie Financire Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Compagnie Financire Richemont
Pair trading matchups for Compagnie Financire
Pair Trading with Dow Jones and Compagnie Financire
The main advantage of trading using opposite Dow Jones and Compagnie Financire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Compagnie Financire 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 Compagnie Financire will offset losses from the drop in Compagnie Financire's long position.| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
| Compagnie Financire vs. Swatch Group AG | Compagnie Financire vs. Givaudan SA | Compagnie Financire vs. Zurich Insurance Group | Compagnie Financire vs. Novartis AG |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |