Correlation Between Dow Jones and Profoto Holding
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Profoto Holding 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 Profoto Holding 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 Profoto Holding AB, you can compare the effects of market volatilities on Dow Jones and Profoto Holding 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 Profoto Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Profoto Holding.
Diversification Opportunities for Dow Jones and Profoto Holding
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Profoto is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Profoto Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profoto Holding AB 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 Profoto Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profoto Holding AB has no effect on the direction of Dow Jones i.e., Dow Jones and Profoto Holding go up and down completely randomly.
Pair Corralation between Dow Jones and Profoto Holding
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.29 times more return on investment than Profoto Holding. However, Dow Jones Industrial is 3.46 times less risky than Profoto Holding. It trades about 0.21 of its potential returns per unit of risk. Profoto Holding AB is currently generating about -0.06 per unit of risk. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Profoto Holding AB
Performance |
| Timeline |
Dow Jones and Profoto Holding Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Profoto Holding AB
Pair trading matchups for Profoto Holding
Pair Trading with Dow Jones and Profoto Holding
The main advantage of trading using opposite Dow Jones and Profoto Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Profoto Holding 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 Profoto Holding will offset losses from the drop in Profoto Holding's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| Profoto Holding vs. Awardit AB | Profoto Holding vs. RVRC Holding AB | Profoto Holding vs. Smart Eye AB | Profoto Holding vs. KABE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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