Correlation Between Dow Jones and FRESENIUS SE+CO
Can any of the company-specific risk be diversified away by investing in both Dow Jones and FRESENIUS SE+CO 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 FRESENIUS SE+CO 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 FRESENIUS SECO ADR, you can compare the effects of market volatilities on Dow Jones and FRESENIUS SE+CO 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 FRESENIUS SE+CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and FRESENIUS SE+CO.
Diversification Opportunities for Dow Jones and FRESENIUS SE+CO
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and FRESENIUS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and FRESENIUS SECO ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRESENIUS SECO ADR 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 FRESENIUS SE+CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRESENIUS SECO ADR has no effect on the direction of Dow Jones i.e., Dow Jones and FRESENIUS SE+CO go up and down completely randomly.
Pair Corralation between Dow Jones and FRESENIUS SE+CO
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.4 times less return on investment than FRESENIUS SE+CO. But when comparing it to its historical volatility, Dow Jones Industrial is 1.6 times less risky than FRESENIUS SE+CO. It trades about 0.29 of its potential returns per unit of risk. FRESENIUS SECO ADR is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 820.00 in FRESENIUS SECO ADR on November 4, 2024 and sell it today you would earn a total of 95.00 from holding FRESENIUS SECO ADR or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. FRESENIUS SECO ADR
Performance |
| Timeline |
Dow Jones and FRESENIUS SE+CO Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
FRESENIUS SECO ADR
Pair trading matchups for FRESENIUS SE+CO
Pair Trading with Dow Jones and FRESENIUS SE+CO
The main advantage of trading using opposite Dow Jones and FRESENIUS SE+CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, FRESENIUS SE+CO 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 FRESENIUS SE+CO will offset losses from the drop in FRESENIUS SE+CO's long position.| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
| FRESENIUS SE+CO vs. Corsair Gaming | FRESENIUS SE+CO vs. Methode Electronics | FRESENIUS SE+CO vs. LPKF Laser Electronics | FRESENIUS SE+CO vs. Nanjing Panda Electronics |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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