Correlation Between Dow Jones and OTP Bank
Can any of the company-specific risk be diversified away by investing in both Dow Jones and OTP Bank 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 OTP Bank 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 OTP Bank Nyrt, you can compare the effects of market volatilities on Dow Jones and OTP Bank 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 OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and OTP Bank.
Diversification Opportunities for Dow Jones and OTP Bank
Poor diversification
The 3 months correlation between Dow and OTP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt 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 OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of Dow Jones i.e., Dow Jones and OTP Bank go up and down completely randomly.
Pair Corralation between Dow Jones and OTP Bank
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.56 times less return on investment than OTP Bank. But when comparing it to its historical volatility, Dow Jones Industrial is 1.64 times less risky than OTP Bank. It trades about 0.13 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,795,000 in OTP Bank Nyrt on August 24, 2024 and sell it today you would earn a total of 365,000 from holding OTP Bank Nyrt or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. OTP Bank Nyrt
Performance |
| Timeline |
Dow Jones and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
OTP Bank Nyrt
Pair trading matchups for OTP Bank
Pair Trading with Dow Jones and OTP Bank
The main advantage of trading using opposite Dow Jones and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, OTP Bank 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 OTP Bank will offset losses from the drop in OTP Bank's long position.| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
| OTP Bank vs. OPUS GLOBAL Nyrt | OTP Bank vs. Infineon Technologies AG | OTP Bank vs. Appeninn Nyrt | OTP Bank vs. MOL Nyrt |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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