Correlation Between Dow Jones and Amicus Therapeutics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amicus Therapeutics 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 Amicus Therapeutics 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 Amicus Therapeutics, you can compare the effects of market volatilities on Dow Jones and Amicus Therapeutics 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 Amicus Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amicus Therapeutics.
Diversification Opportunities for Dow Jones and Amicus Therapeutics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Amicus is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amicus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amicus Therapeutics 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 Amicus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amicus Therapeutics has no effect on the direction of Dow Jones i.e., Dow Jones and Amicus Therapeutics go up and down completely randomly.
Pair Corralation between Dow Jones and Amicus Therapeutics
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.49 times more return on investment than Amicus Therapeutics. However, Dow Jones Industrial is 2.05 times less risky than Amicus Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Amicus Therapeutics is currently generating about -0.13 per unit of risk. If you would invest 4,284,026 in Dow Jones Industrial on October 21, 2024 and sell it today you would earn a total of 64,757 from holding Dow Jones Industrial or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amicus Therapeutics
Performance |
| Timeline |
Dow Jones and Amicus Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amicus Therapeutics
Pair trading matchups for Amicus Therapeutics
Pair Trading with Dow Jones and Amicus Therapeutics
The main advantage of trading using opposite Dow Jones and Amicus Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amicus Therapeutics 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 Amicus Therapeutics will offset losses from the drop in Amicus Therapeutics' long position.| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
| Amicus Therapeutics vs. Incyte | Amicus Therapeutics vs. Denali Therapeutics | Amicus Therapeutics vs. argenx NV ADR | Amicus Therapeutics vs. Harmony Biosciences Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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