Correlation Between Dow Jones and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Airbus Group 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 Airbus Group 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 Airbus Group SE, you can compare the effects of market volatilities on Dow Jones and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Airbus Group.
Diversification Opportunities for Dow Jones and Airbus Group
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Airbus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Dow Jones i.e., Dow Jones and Airbus Group go up and down completely randomly.
Pair Corralation between Dow Jones and Airbus Group
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.32 times more return on investment than Airbus Group. However, Dow Jones Industrial is 3.13 times less risky than Airbus Group. It trades about 0.12 of its potential returns per unit of risk. Airbus Group SE is currently generating about 0.03 per unit of risk. If you would invest 3,387,678 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,103,387 from holding Dow Jones Industrial or generate 32.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.89% |
| Values | Daily Returns |
Dow Jones Industrial vs. Airbus Group SE
Performance |
| Timeline |
Dow Jones and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Airbus Group SE
Pair trading matchups for Airbus Group
Pair Trading with Dow Jones and Airbus Group
The main advantage of trading using opposite Dow Jones and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Airbus Group vs. Airbus Group NV | Airbus Group vs. Park Electrochemical | Airbus Group vs. Rolls Royce Holdings PLC | Airbus Group vs. Triumph Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |