Correlation Between Dow Jones and Hermès International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hermès International 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 Hermès International 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 Herms International Socit, you can compare the effects of market volatilities on Dow Jones and Hermès International 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 Hermès International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hermès International.
Diversification Opportunities for Dow Jones and Hermès International
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Hermès is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit 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 Hermès International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of Dow Jones i.e., Dow Jones and Hermès International go up and down completely randomly.
Pair Corralation between Dow Jones and Hermès International
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Hermès International. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 2.01 times less risky than Hermès International. The index trades about -0.25 of its potential returns per unit of risk. The Herms International Socit is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 225,500 in Herms International Socit on October 15, 2024 and sell it today you would earn a total of 11,800 from holding Herms International Socit or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Herms International Socit
Performance |
| Timeline |
Dow Jones and Hermès International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Herms International Socit
Pair trading matchups for Hermès International
Pair Trading with Dow Jones and Hermès International
The main advantage of trading using opposite Dow Jones and Hermès International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hermès International 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 Hermès International will offset losses from the drop in Hermès International's long position.| Dow Jones vs. Chipotle Mexican Grill | Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Dine Brands Global | Dow Jones vs. Alvotech |
| Hermès International vs. Eurasia Mining Plc | Hermès International vs. Mitsui Chemicals | Hermès International vs. Yanzhou Coal Mining | Hermès International vs. SILICON LABORATOR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |