Correlation Between Dow Jones and Pampa Energia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pampa Energia 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 Pampa Energia 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 Pampa Energia SA, you can compare the effects of market volatilities on Dow Jones and Pampa Energia 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 Pampa Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pampa Energia.
Diversification Opportunities for Dow Jones and Pampa Energia
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Pampa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pampa Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energia 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 Pampa Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energia SA has no effect on the direction of Dow Jones i.e., Dow Jones and Pampa Energia go up and down completely randomly.
Pair Corralation between Dow Jones and Pampa Energia
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.89 times less return on investment than Pampa Energia. But when comparing it to its historical volatility, Dow Jones Industrial is 1.84 times less risky than Pampa Energia. It trades about 0.26 of its potential returns per unit of risk. Pampa Energia SA is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 6,700 in Pampa Energia SA on August 28, 2024 and sell it today you would earn a total of 1,563 from holding Pampa Energia SA or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pampa Energia SA
Performance |
| Timeline |
Dow Jones and Pampa Energia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pampa Energia SA
Pair trading matchups for Pampa Energia
Pair Trading with Dow Jones and Pampa Energia
The main advantage of trading using opposite Dow Jones and Pampa Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pampa Energia 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 Pampa Energia will offset losses from the drop in Pampa Energia's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Pampa Energia vs. Grupo Financiero Galicia | Pampa Energia vs. Banco Macro SA | Pampa Energia vs. Empresa Distribuidora y | Pampa Energia vs. Transportadora de Gas |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |