Correlation Between Dow Jones and European Wax
Can any of the company-specific risk be diversified away by investing in both Dow Jones and European Wax 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 European Wax 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 European Wax Center, you can compare the effects of market volatilities on Dow Jones and European Wax 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 European Wax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and European Wax.
Diversification Opportunities for Dow Jones and European Wax
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and European is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and European Wax Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Wax Center 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 European Wax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Wax Center has no effect on the direction of Dow Jones i.e., Dow Jones and European Wax go up and down completely randomly.
Pair Corralation between Dow Jones and European Wax
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.17 times more return on investment than European Wax. However, Dow Jones Industrial is 5.79 times less risky than European Wax. It trades about 0.19 of its potential returns per unit of risk. European Wax Center is currently generating about -0.04 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 378,513 from holding Dow Jones Industrial or generate 9.25% 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. European Wax Center
Performance |
| Timeline |
Dow Jones and European Wax Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
European Wax Center
Pair trading matchups for European Wax
Pair Trading with Dow Jones and European Wax
The main advantage of trading using opposite Dow Jones and European Wax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, European Wax 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 European Wax will offset losses from the drop in European Wax's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |