Correlation Between Dow Jones and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Hoist Finance 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 Hoist Finance 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 Hoist Finance AB, you can compare the effects of market volatilities on Dow Jones and Hoist Finance 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 Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Hoist Finance.
Diversification Opportunities for Dow Jones and Hoist Finance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Hoist is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB 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 Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of Dow Jones i.e., Dow Jones and Hoist Finance go up and down completely randomly.
Pair Corralation between Dow Jones and Hoist Finance
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.52 times less return on investment than Hoist Finance. But when comparing it to its historical volatility, Dow Jones Industrial is 4.03 times less risky than Hoist Finance. It trades about 0.08 of its potential returns per unit of risk. Hoist Finance AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,522 in Hoist Finance AB on August 26, 2024 and sell it today you would earn a total of 7,148 from holding Hoist Finance AB or generate 283.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dow Jones Industrial vs. Hoist Finance AB
Performance |
| Timeline |
Dow Jones and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Hoist Finance AB
Pair trading matchups for Hoist Finance
Pair Trading with Dow Jones and Hoist Finance
The main advantage of trading using opposite Dow Jones and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Hoist Finance vs. Intrum Justitia AB | Hoist Finance vs. Inwido AB | Hoist Finance vs. Resurs Holding AB | Hoist Finance vs. Cloetta 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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