Correlation Between Dow Jones and Investin Optimal
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Investin Optimal 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 Investin Optimal 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 Investin Optimal Stabil, you can compare the effects of market volatilities on Dow Jones and Investin Optimal 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 Investin Optimal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Investin Optimal.
Diversification Opportunities for Dow Jones and Investin Optimal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Investin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Investin Optimal Stabil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investin Optimal Stabil 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 Investin Optimal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investin Optimal Stabil has no effect on the direction of Dow Jones i.e., Dow Jones and Investin Optimal go up and down completely randomly.
Pair Corralation between Dow Jones and Investin Optimal
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.55 times less return on investment than Investin Optimal. In addition to that, Dow Jones is 3.76 times more volatile than Investin Optimal Stabil. It trades about 0.02 of its total potential returns per unit of risk. Investin Optimal Stabil is currently generating about 0.22 per unit of volatility. If you would invest 14,485 in Investin Optimal Stabil on September 20, 2024 and sell it today you would earn a total of 432.00 from holding Investin Optimal Stabil or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Dow Jones Industrial vs. Investin Optimal Stabil
Performance |
| Timeline |
Dow Jones and Investin Optimal Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Investin Optimal Stabil
Pair trading matchups for Investin Optimal
Pair Trading with Dow Jones and Investin Optimal
The main advantage of trading using opposite Dow Jones and Investin Optimal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Investin Optimal 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 Investin Optimal will offset losses from the drop in Investin Optimal's long position.| Dow Jones vs. Digi International | Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. United Microelectronics | Dow Jones vs. Weibo Corp |
| Investin Optimal vs. Vestjysk Bank AS | Investin Optimal vs. Laan Spar Bank | Investin Optimal vs. PARKEN Sport Entertainment | Investin Optimal vs. Kreditbanken AS |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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