Correlation Between Dow Jones and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SalMar ASA 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 SalMar ASA 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 SalMar ASA, you can compare the effects of market volatilities on Dow Jones and SalMar ASA 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SalMar ASA.
Diversification Opportunities for Dow Jones and SalMar ASA
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and SalMar is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Dow Jones i.e., Dow Jones and SalMar ASA go up and down completely randomly.
Pair Corralation between Dow Jones and SalMar ASA
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.58 times more return on investment than SalMar ASA. However, Dow Jones Industrial is 1.72 times less risky than SalMar ASA. It trades about 0.21 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.04 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 Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. SalMar ASA
Performance |
| Timeline |
Dow Jones and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SalMar ASA
Pair trading matchups for SalMar ASA
Pair Trading with Dow Jones and SalMar ASA
The main advantage of trading using opposite Dow Jones and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| SalMar ASA vs. Mowi ASA | SalMar ASA vs. Lery Seafood Group | SalMar ASA vs. Pf Bakkafrost | SalMar ASA vs. Grieg Seafood ASA |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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