Correlation Between Dow Jones and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nexam Chemical 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 Nexam Chemical 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 Nexam Chemical Holding, you can compare the effects of market volatilities on Dow Jones and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nexam Chemical.
Diversification Opportunities for Dow Jones and Nexam Chemical
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Nexam is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Dow Jones i.e., Dow Jones and Nexam Chemical go up and down completely randomly.
Pair Corralation between Dow Jones and Nexam Chemical
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.4 times more return on investment than Nexam Chemical. However, Dow Jones Industrial is 2.5 times less risky than Nexam Chemical. It trades about 0.25 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about -0.14 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nexam Chemical Holding
Performance |
| Timeline |
Dow Jones and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nexam Chemical Holding
Pair trading matchups for Nexam Chemical
Pair Trading with Dow Jones and Nexam Chemical
The main advantage of trading using opposite Dow Jones and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Nexam Chemical vs. Bjorn Borg AB | Nexam Chemical vs. Diadrom Holding AB | Nexam Chemical vs. Anoto Group AB | Nexam Chemical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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