Correlation Between Dow Jones and Signify NV
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Signify NV 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 Signify NV 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 Signify NV, you can compare the effects of market volatilities on Dow Jones and Signify NV 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 Signify NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Signify NV.
Diversification Opportunities for Dow Jones and Signify NV
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Signify is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV 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 Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Dow Jones i.e., Dow Jones and Signify NV go up and down completely randomly.
Pair Corralation between Dow Jones and Signify NV
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.37 times more return on investment than Signify NV. However, Dow Jones Industrial is 2.71 times less risky than Signify NV. It trades about 0.26 of its potential returns per unit of risk. Signify NV is currently generating about -0.18 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Signify NV
Performance |
| Timeline |
Dow Jones and Signify NV Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Signify NV
Pair trading matchups for Signify NV
Pair Trading with Dow Jones and Signify NV
The main advantage of trading using opposite Dow Jones and Signify NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Signify NV 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 Signify NV will offset losses from the drop in Signify NV'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 |
| Signify NV vs. FREYR Battery SA | Signify NV vs. nVent Electric PLC | Signify NV vs. Hubbell | Signify NV vs. Advanced Energy Industries |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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