Correlation Between Dow Jones and NLS Pharmaceutics
Can any of the company-specific risk be diversified away by investing in both Dow Jones and NLS Pharmaceutics 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 NLS Pharmaceutics 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 NLS Pharmaceutics AG, you can compare the effects of market volatilities on Dow Jones and NLS Pharmaceutics 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 NLS Pharmaceutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NLS Pharmaceutics.
Diversification Opportunities for Dow Jones and NLS Pharmaceutics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and NLS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Dow Jones i.e., Dow Jones and NLS Pharmaceutics go up and down completely randomly.
Pair Corralation between Dow Jones and NLS Pharmaceutics
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.22 times less return on investment than NLS Pharmaceutics. But when comparing it to its historical volatility, Dow Jones Industrial is 24.94 times less risky than NLS Pharmaceutics. It trades about 0.37 of its potential returns per unit of risk. NLS Pharmaceutics AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.50 in NLS Pharmaceutics AG on September 1, 2024 and sell it today you would lose (0.50) from holding NLS Pharmaceutics AG or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. NLS Pharmaceutics AG
Performance |
| Timeline |
Dow Jones and NLS Pharmaceutics Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NLS Pharmaceutics AG
Pair trading matchups for NLS Pharmaceutics
Pair Trading with Dow Jones and NLS Pharmaceutics
The main advantage of trading using opposite Dow Jones and NLS Pharmaceutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NLS Pharmaceutics 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 NLS Pharmaceutics will offset losses from the drop in NLS Pharmaceutics' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| NLS Pharmaceutics vs. Reviva Pharmaceuticals Holdings | NLS Pharmaceutics vs. GeoVax Labs | NLS Pharmaceutics vs. NLS Pharmaceutics AG | NLS Pharmaceutics vs. Lixte Biotechnology Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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