Correlation Between Dow Jones and CD Projekt
Can any of the company-specific risk be diversified away by investing in both Dow Jones and CD Projekt 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 CD Projekt 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 CD Projekt SA, you can compare the effects of market volatilities on Dow Jones and CD Projekt 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 CD Projekt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and CD Projekt.
Diversification Opportunities for Dow Jones and CD Projekt
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and OTGLF is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and CD Projekt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Projekt 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 CD Projekt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Projekt SA has no effect on the direction of Dow Jones i.e., Dow Jones and CD Projekt go up and down completely randomly.
Pair Corralation between Dow Jones and CD Projekt
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.26 times more return on investment than CD Projekt. However, Dow Jones Industrial is 3.79 times less risky than CD Projekt. It trades about 0.12 of its potential returns per unit of risk. CD Projekt SA is currently generating about 0.03 per unit of risk. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Dow Jones Industrial vs. CD Projekt SA
Performance |
| Timeline |
Dow Jones and CD Projekt Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
CD Projekt SA
Pair trading matchups for CD Projekt
Pair Trading with Dow Jones and CD Projekt
The main advantage of trading using opposite Dow Jones and CD Projekt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, CD Projekt 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 CD Projekt will offset losses from the drop in CD Projekt's long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| CD Projekt vs. Square Enix Holdings | CD Projekt vs. Sega Sammy Holdings | CD Projekt vs. Capcom Co Ltd | CD Projekt vs. Embracer 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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