Correlation Between Dow Jones and Amundi ETF
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amundi ETF 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 Amundi ETF 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 Amundi ETF PEA, you can compare the effects of market volatilities on Dow Jones and Amundi ETF 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 Amundi ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amundi ETF.
Diversification Opportunities for Dow Jones and Amundi ETF
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Amundi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amundi ETF PEA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi ETF PEA 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 Amundi ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi ETF PEA has no effect on the direction of Dow Jones i.e., Dow Jones and Amundi ETF go up and down completely randomly.
Pair Corralation between Dow Jones and Amundi ETF
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.02 times less return on investment than Amundi ETF. But when comparing it to its historical volatility, Dow Jones Industrial is 1.2 times less risky than Amundi ETF. It trades about 0.27 of its potential returns per unit of risk. Amundi ETF PEA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,446 in Amundi ETF PEA on August 28, 2024 and sell it today you would earn a total of 263.00 from holding Amundi ETF PEA or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amundi ETF PEA
Performance |
| Timeline |
Dow Jones and Amundi ETF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amundi ETF PEA
Pair trading matchups for Amundi ETF
Pair Trading with Dow Jones and Amundi ETF
The main advantage of trading using opposite Dow Jones and Amundi ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amundi ETF 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 Amundi ETF will offset losses from the drop in Amundi ETF'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 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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