Correlation Between Dow Jones and Genmab AS
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Genmab AS 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 Genmab AS 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 Genmab AS, you can compare the effects of market volatilities on Dow Jones and Genmab AS 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 Genmab AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Genmab AS.
Diversification Opportunities for Dow Jones and Genmab AS
Pay attention - limited upside
The 3 months correlation between Dow and Genmab is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS 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 Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of Dow Jones i.e., Dow Jones and Genmab AS go up and down completely randomly.
Pair Corralation between Dow Jones and Genmab AS
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.28 times more return on investment than Genmab AS. However, Dow Jones Industrial is 3.6 times less risky than Genmab AS. It trades about 0.37 of its potential returns per unit of risk. Genmab AS is currently generating about -0.07 per unit of risk. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Genmab AS
Performance |
| Timeline |
Dow Jones and Genmab AS Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Genmab AS
Pair trading matchups for Genmab AS
Pair Trading with Dow Jones and Genmab AS
The main advantage of trading using opposite Dow Jones and Genmab AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Genmab AS 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 Genmab AS will offset losses from the drop in Genmab AS's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Genmab AS vs. Inhibikase Therapeutics | Genmab AS vs. Purple Biotech | Genmab AS vs. Synaptogenix | Genmab AS vs. Legend Biotech Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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