Correlation Between Dow Jones and Opter AB
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Opter AB 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 Opter AB 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 Opter AB, you can compare the effects of market volatilities on Dow Jones and Opter AB 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 Opter AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Opter AB.
Diversification Opportunities for Dow Jones and Opter AB
Very weak diversification
The 3 months correlation between Dow and Opter is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Opter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opter AB 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 Opter AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opter AB has no effect on the direction of Dow Jones i.e., Dow Jones and Opter AB go up and down completely randomly.
Pair Corralation between Dow Jones and Opter AB
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.58 times less return on investment than Opter AB. But when comparing it to its historical volatility, Dow Jones Industrial is 2.1 times less risky than Opter AB. It trades about 0.27 of its potential returns per unit of risk. Opter AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 11,050 in Opter AB on August 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Opter AB or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Opter AB
Performance |
| Timeline |
Dow Jones and Opter AB Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Opter AB
Pair trading matchups for Opter AB
Pair Trading with Dow Jones and Opter AB
The main advantage of trading using opposite Dow Jones and Opter AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Opter AB 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 Opter AB will offset losses from the drop in Opter AB's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| Opter AB vs. Sinch AB | Opter AB vs. Hexatronic Group AB | Opter AB vs. Samhllsbyggnadsbolaget i Norden | Opter AB vs. Storskogen Group 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 Stocks Directory module to find actively traded stocks across global markets.
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