Correlation Between Dow Jones and EMS CHEMIE
Can any of the company-specific risk be diversified away by investing in both Dow Jones and EMS CHEMIE 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 EMS CHEMIE 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 EMS CHEMIE HOLDING AG, you can compare the effects of market volatilities on Dow Jones and EMS CHEMIE 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 EMS CHEMIE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and EMS CHEMIE.
Diversification Opportunities for Dow Jones and EMS CHEMIE
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and EMS is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and EMS CHEMIE HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMS CHEMIE HOLDING 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 EMS CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMS CHEMIE HOLDING has no effect on the direction of Dow Jones i.e., Dow Jones and EMS CHEMIE go up and down completely randomly.
Pair Corralation between Dow Jones and EMS CHEMIE
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.62 times more return on investment than EMS CHEMIE. However, Dow Jones Industrial is 1.6 times less risky than EMS CHEMIE. It trades about 0.1 of its potential returns per unit of risk. EMS CHEMIE HOLDING AG is currently generating about 0.01 per unit of risk. If you would invest 3,897,241 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 532,410 from holding Dow Jones Industrial or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Dow Jones Industrial vs. EMS CHEMIE HOLDING AG
Performance |
| Timeline |
Dow Jones and EMS CHEMIE Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
EMS CHEMIE HOLDING AG
Pair trading matchups for EMS CHEMIE
Pair Trading with Dow Jones and EMS CHEMIE
The main advantage of trading using opposite Dow Jones and EMS CHEMIE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, EMS CHEMIE 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 EMS CHEMIE will offset losses from the drop in EMS CHEMIE's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| EMS CHEMIE vs. St Galler Kantonalbank | EMS CHEMIE vs. VP Bank AG | EMS CHEMIE vs. Metall Zug AG | EMS CHEMIE vs. mobilezone ag |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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