Correlation Between Dow Jones and Entera Bio
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Entera Bio 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 Entera Bio 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 Entera Bio, you can compare the effects of market volatilities on Dow Jones and Entera Bio 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 Entera Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Entera Bio.
Diversification Opportunities for Dow Jones and Entera Bio
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Entera is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio 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 Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of Dow Jones i.e., Dow Jones and Entera Bio go up and down completely randomly.
Pair Corralation between Dow Jones and Entera Bio
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.36 times more return on investment than Entera Bio. However, Dow Jones Industrial is 2.76 times less risky than Entera Bio. It trades about 0.21 of its potential returns per unit of risk. Entera Bio is currently generating about -0.21 per unit of risk. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Entera Bio
Performance |
| Timeline |
Dow Jones and Entera Bio Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Entera Bio
Pair trading matchups for Entera Bio
Pair Trading with Dow Jones and Entera Bio
The main advantage of trading using opposite Dow Jones and Entera Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Entera Bio 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 Entera Bio will offset losses from the drop in Entera Bio's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Entera Bio vs. NLS Pharmaceutics AG | Entera Bio vs. Vaccinex | Entera Bio vs. Alterity Therapeutics | Entera Bio vs. Immutep Ltd ADR |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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