Correlation Between Dow Jones and Amundi SP
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amundi SP 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 SP 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 SP Global, you can compare the effects of market volatilities on Dow Jones and Amundi SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amundi SP.
Diversification Opportunities for Dow Jones and Amundi SP
Very poor diversification
The 3 months correlation between Dow and Amundi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amundi SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi SP Global 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi SP Global has no effect on the direction of Dow Jones i.e., Dow Jones and Amundi SP go up and down completely randomly.
Pair Corralation between Dow Jones and Amundi SP
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.11 times less return on investment than Amundi SP. But when comparing it to its historical volatility, Dow Jones Industrial is 1.25 times less risky than Amundi SP. It trades about 0.37 of its potential returns per unit of risk. Amundi SP Global is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Amundi SP Global on September 5, 2024 and sell it today you would earn a total of 100.00 from holding Amundi SP Global or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amundi SP Global
Performance |
| Timeline |
Dow Jones and Amundi SP Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amundi SP Global
Pair trading matchups for Amundi SP
Pair Trading with Dow Jones and Amundi SP
The main advantage of trading using opposite Dow Jones and Amundi SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amundi SP 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 SP will offset losses from the drop in Amundi SP's long position.| Dow Jones vs. Shake Shack | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Dave Busters Entertainment | Dow Jones vs. Meli Hotels International |
| Amundi SP vs. Amundi Index Solutions | Amundi SP vs. Amundi Index Solutions | Amundi SP vs. Amundi MSCI World | Amundi SP 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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