Correlation Between Dow Jones and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on Dow Jones and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Compagnie Plastic.
Diversification Opportunities for Dow Jones and Compagnie Plastic
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Compagnie is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Dow Jones i.e., Dow Jones and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Dow Jones and Compagnie Plastic
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Compagnie Plastic. However, Dow Jones Industrial is 3.37 times less risky than Compagnie Plastic. It trades about 0.17 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.03 per unit of risk. If you would invest 4,231,300 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 254,731 from holding Dow Jones Industrial or generate 6.02% 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. Compagnie Plastic Omnium
Performance |
| Timeline |
Dow Jones and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Compagnie Plastic Omnium
Pair trading matchups for Compagnie Plastic
Pair Trading with Dow Jones and Compagnie Plastic
The main advantage of trading using opposite Dow Jones and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. NMI Holdings | Compagnie Plastic vs. Origin Agritech | Compagnie Plastic vs. SIVERS SEMICONDUCTORS AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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