Correlation Between Dow Jones and Amundi Index
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amundi Index 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 Amundi Index 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 Amundi Index Solutions, you can compare the effects of market volatilities on Dow Jones and Amundi Index 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 Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amundi Index.
Diversification Opportunities for Dow Jones and Amundi Index
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Amundi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions 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 Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Dow Jones i.e., Dow Jones and Amundi Index go up and down completely randomly.
Pair Corralation between Dow Jones and Amundi Index
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.67 times more return on investment than Amundi Index. However, Dow Jones Industrial is 1.5 times less risky than Amundi Index. It trades about 0.12 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.04 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amundi Index Solutions
Performance |
| Timeline |
Dow Jones and Amundi Index Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amundi Index Solutions
Pair trading matchups for Amundi Index
Pair Trading with Dow Jones and Amundi Index
The main advantage of trading using opposite Dow Jones and Amundi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amundi Index 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 Amundi Index will offset losses from the drop in Amundi Index's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Amundi Index vs. Amundi Index Solutions | Amundi Index vs. Amundi Index Solutions | Amundi Index vs. Amundi Index MSCI | Amundi Index vs. Amundi Index Solutions |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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