Correlation Between Dow Jones and Amundi EUR
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amundi EUR 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 Amundi EUR 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 Amundi EUR High, you can compare the effects of market volatilities on Dow Jones and Amundi EUR 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 Amundi EUR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amundi EUR.
Diversification Opportunities for Dow Jones and Amundi EUR
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Amundi is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amundi EUR High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi EUR High 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 Amundi EUR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi EUR High has no effect on the direction of Dow Jones i.e., Dow Jones and Amundi EUR go up and down completely randomly.
Pair Corralation between Dow Jones and Amundi EUR
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.88 times more return on investment than Amundi EUR. However, Dow Jones is 2.88 times more volatile than Amundi EUR High. It trades about 0.22 of its potential returns per unit of risk. Amundi EUR High is currently generating about -0.06 per unit of risk. If you would invest 4,299,221 in Dow Jones Industrial on October 28, 2024 and sell it today you would earn a total of 143,204 from holding Dow Jones Industrial or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.37% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amundi EUR High
Performance |
| Timeline |
Dow Jones and Amundi EUR Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amundi EUR High
Pair trading matchups for Amundi EUR
Pair Trading with Dow Jones and Amundi EUR
The main advantage of trading using opposite Dow Jones and Amundi EUR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amundi EUR 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 Amundi EUR will offset losses from the drop in Amundi EUR's long position.| Dow Jones vs. Turning Point Brands | Dow Jones vs. Weyco Group | Dow Jones vs. Willamette Valley Vineyards | Dow Jones vs. Compania Cervecerias Unidas |
| Amundi EUR vs. Amundi Index Solutions | Amundi EUR vs. Amundi Index Solutions | Amundi EUR vs. Amundi Index Solutions | Amundi EUR vs. Amundi Index Solutions |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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