Correlation Between Dow Jones and Inventiva
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Inventiva 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 Inventiva 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 Inventiva Sa, you can compare the effects of market volatilities on Dow Jones and Inventiva 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 Inventiva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Inventiva.
Diversification Opportunities for Dow Jones and Inventiva
Very weak diversification
The 3 months correlation between Dow and Inventiva is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Inventiva Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventiva Sa 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 Inventiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventiva Sa has no effect on the direction of Dow Jones i.e., Dow Jones and Inventiva go up and down completely randomly.
Pair Corralation between Dow Jones and Inventiva
Assuming the 90 days trading horizon Dow Jones is expected to generate 8.14 times less return on investment than Inventiva. But when comparing it to its historical volatility, Dow Jones Industrial is 8.95 times less risky than Inventiva. It trades about 0.16 of its potential returns per unit of risk. Inventiva Sa is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 187.00 in Inventiva Sa on August 31, 2024 and sell it today you would earn a total of 81.00 from holding Inventiva Sa or generate 43.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Inventiva Sa
Performance |
| Timeline |
Dow Jones and Inventiva Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Inventiva Sa
Pair trading matchups for Inventiva
Pair Trading with Dow Jones and Inventiva
The main advantage of trading using opposite Dow Jones and Inventiva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Inventiva 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 Inventiva will offset losses from the drop in Inventiva's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Inventiva vs. Mineralys Therapeutics, Common | Inventiva vs. Eliem Therapeutics | Inventiva vs. Anebulo Pharmaceuticals | Inventiva vs. Janux Therapeutics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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