Correlation Between Dow Jones and Elisa Oyj
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Elisa Oyj 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 Elisa Oyj 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 Elisa Oyj, you can compare the effects of market volatilities on Dow Jones and Elisa Oyj 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 Elisa Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Elisa Oyj.
Diversification Opportunities for Dow Jones and Elisa Oyj
Modest diversification
The 3 months correlation between Dow and Elisa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Elisa Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elisa Oyj 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 Elisa Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elisa Oyj has no effect on the direction of Dow Jones i.e., Dow Jones and Elisa Oyj go up and down completely randomly.
Pair Corralation between Dow Jones and Elisa Oyj
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.03 times less return on investment than Elisa Oyj. But when comparing it to its historical volatility, Dow Jones Industrial is 1.3 times less risky than Elisa Oyj. It trades about 0.17 of its potential returns per unit of risk. Elisa Oyj is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,140 in Elisa Oyj on October 24, 2024 and sell it today you would earn a total of 92.00 from holding Elisa Oyj or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Elisa Oyj
Performance |
| Timeline |
Dow Jones and Elisa Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Elisa Oyj
Pair trading matchups for Elisa Oyj
Pair Trading with Dow Jones and Elisa Oyj
The main advantage of trading using opposite Dow Jones and Elisa Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Elisa Oyj 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 Elisa Oyj will offset losses from the drop in Elisa Oyj's long position.| Dow Jones vs. Transocean | Dow Jones vs. Noble plc | Dow Jones vs. Evolution Gaming Group | Dow Jones vs. Addus HomeCare |
| Elisa Oyj vs. Kesko Oyj | Elisa Oyj vs. Sampo Oyj A | Elisa Oyj vs. UPM Kymmene Oyj | Elisa Oyj vs. Orion Oyj B |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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