Correlation Between Dow Jones and DKINMAKK

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Can any of the company-specific risk be diversified away by investing in both Dow Jones and DKINMAKK 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 DKINMAKK 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 Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on Dow Jones and DKINMAKK 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 DKINMAKK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and DKINMAKK.

Diversification Opportunities for Dow Jones and DKINMAKK

0.59

Correlation Coefficient

Dow Jones

DKINMAKK

Very weak diversification

The 3 months correlation between Dow and DKINMAKK is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen 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 DKINMAKK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of Dow Jones i.e., Dow Jones and DKINMAKK go up and down completely randomly.

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Pair Corralation between Dow Jones and DKINMAKK

Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.27 times more return on investment than DKINMAKK. However, Dow Jones is 1.27 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.35 of its potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.03 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 291,093 from holding Dow Jones Industrial or generate 6.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Dow Jones Industrial vs. Investeringsforeningen Danske

Performance

Timeline

Dow Jones and DKINMAKK Volatility Contrast

Predicted Return Density

Returns

Dow Jones Industrial

Pair trading matchups for Dow Jones

	Dow Jones vs. Shake Shack
	Dow Jones vs. Artisan Partners Asset
	Dow Jones vs. Dave Busters Entertainment
	Dow Jones vs. Meli Hotels International

Investeringsforeningen Danske Invest

Pair trading matchups for DKINMAKK

	DKINMAKK vs. Novo Nordisk AS
	DKINMAKK vs. Nordea Bank Abp
	DKINMAKK vs. DSV Panalpina AS
	DKINMAKK vs. AP Mller

Pair Trading with Dow Jones and DKINMAKK

The main advantage of trading using opposite Dow Jones and DKINMAKK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, DKINMAKK 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 DKINMAKK will offset losses from the drop in DKINMAKK's long position.

	Dow Jones vs. Shake Shack
	Dow Jones vs. Artisan Partners Asset
	Dow Jones vs. Dave Busters Entertainment
	Dow Jones vs. Meli Hotels International

The idea behind Dow Jones Industrial and Investeringsforeningen Danske Invest 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.

	DKINMAKK vs. Novo Nordisk AS
	DKINMAKK vs. Nordea Bank Abp
	DKINMAKK vs. DSV Panalpina AS
	DKINMAKK vs. AP Mller

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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