Correlation Between Dow Jones and Engie Energia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Engie Energia 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 Engie Energia 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 Engie Energia Chile, you can compare the effects of market volatilities on Dow Jones and Engie Energia 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 Engie Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Engie Energia.
Diversification Opportunities for Dow Jones and Engie Energia
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Engie is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Engie Energia Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Energia Chile 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 Engie Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Energia Chile has no effect on the direction of Dow Jones i.e., Dow Jones and Engie Energia go up and down completely randomly.
Pair Corralation between Dow Jones and Engie Energia
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Engie Energia. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.7 times less risky than Engie Energia. The index trades about -0.28 of its potential returns per unit of risk. The Engie Energia Chile is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 89,500 in Engie Energia Chile on September 24, 2024 and sell it today you would earn a total of 299.00 from holding Engie Energia Chile or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Engie Energia Chile
Performance |
| Timeline |
Dow Jones and Engie Energia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Engie Energia Chile
Pair trading matchups for Engie Energia
Pair Trading with Dow Jones and Engie Energia
The main advantage of trading using opposite Dow Jones and Engie Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Engie Energia 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 Engie Energia will offset losses from the drop in Engie Energia's long position.| Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Sonida Senior Living | Dow Jones vs. Avadel Pharmaceuticals PLC | Dow Jones vs. Cardinal Health |
| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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