Correlation Between Dow Jones and Nitro Games
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nitro Games 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 Nitro Games 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 Nitro Games Oyj, you can compare the effects of market volatilities on Dow Jones and Nitro Games 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 Nitro Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nitro Games.
Diversification Opportunities for Dow Jones and Nitro Games
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Nitro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nitro Games Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitro Games Oyj 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 Nitro Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitro Games Oyj has no effect on the direction of Dow Jones i.e., Dow Jones and Nitro Games go up and down completely randomly.
Pair Corralation between Dow Jones and Nitro Games
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.87 times less return on investment than Nitro Games. But when comparing it to its historical volatility, Dow Jones Industrial is 4.06 times less risky than Nitro Games. It trades about 0.34 of its potential returns per unit of risk. Nitro Games Oyj is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Nitro Games Oyj on November 3, 2024 and sell it today you would earn a total of 22.00 from holding Nitro Games Oyj or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nitro Games Oyj
Performance |
| Timeline |
Dow Jones and Nitro Games Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nitro Games Oyj
Pair trading matchups for Nitro Games
Pair Trading with Dow Jones and Nitro Games
The main advantage of trading using opposite Dow Jones and Nitro Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nitro Games 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 Nitro Games will offset losses from the drop in Nitro Games' long position.| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
| Nitro Games vs. Stillfront Group AB | Nitro Games vs. G5 Entertainment publ | Nitro Games vs. Enad Global 7 | Nitro Games vs. Starbreeze 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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