Correlation Between Dow Jones and Novacyt SA
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Novacyt SA 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 Novacyt SA 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 Novacyt SA, you can compare the effects of market volatilities on Dow Jones and Novacyt SA 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 Novacyt SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Novacyt SA.
Diversification Opportunities for Dow Jones and Novacyt SA
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Novacyt is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Novacyt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt SA 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 Novacyt SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt SA has no effect on the direction of Dow Jones i.e., Dow Jones and Novacyt SA go up and down completely randomly.
Pair Corralation between Dow Jones and Novacyt SA
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.47 times less return on investment than Novacyt SA. But when comparing it to its historical volatility, Dow Jones Industrial is 9.95 times less risky than Novacyt SA. It trades about 0.07 of its potential returns per unit of risk. Novacyt SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 82.00 in Novacyt SA on September 19, 2024 and sell it today you would lose (12.00) from holding Novacyt SA or give up 14.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Novacyt SA
Performance |
| Timeline |
Dow Jones and Novacyt SA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Novacyt SA
Pair trading matchups for Novacyt SA
Pair Trading with Dow Jones and Novacyt SA
The main advantage of trading using opposite Dow Jones and Novacyt SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Novacyt SA 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 Novacyt SA will offset losses from the drop in Novacyt SA's long position.| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
| Novacyt SA vs. Aethlon Medical | Novacyt SA vs. Bone Biologics Corp | Novacyt SA vs. Tivic Health Systems | Novacyt SA vs. Cytosorbents Crp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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