Correlation Between Dow Jones and Loomis AB
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Loomis AB 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 Loomis AB 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 Loomis AB, you can compare the effects of market volatilities on Dow Jones and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Loomis AB.
Diversification Opportunities for Dow Jones and Loomis AB
Very weak diversification
The 3 months correlation between Dow and Loomis is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Loomis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis 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 Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB has no effect on the direction of Dow Jones i.e., Dow Jones and Loomis AB go up and down completely randomly.
Pair Corralation between Dow Jones and Loomis AB
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Loomis AB. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 3.26 times less risky than Loomis AB. The index trades about -0.01 of its potential returns per unit of risk. The Loomis AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,130 in Loomis AB on September 14, 2024 and sell it today you would earn a total of 68.00 from holding Loomis AB or generate 2.17% 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. Loomis AB
Performance |
| Timeline |
Dow Jones and Loomis AB Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Loomis AB
Pair trading matchups for Loomis AB
Pair Trading with Dow Jones and Loomis AB
The main advantage of trading using opposite Dow Jones and Loomis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Loomis AB 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 Loomis AB will offset losses from the drop in Loomis AB's long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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