Correlation Between Dow Jones and Scandinavian Brake
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Scandinavian Brake 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 Scandinavian Brake 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 Scandinavian Brake Systems, you can compare the effects of market volatilities on Dow Jones and Scandinavian Brake 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 Scandinavian Brake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Scandinavian Brake.
Diversification Opportunities for Dow Jones and Scandinavian Brake
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Scandinavian is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Scandinavian Brake Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Brake 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 Scandinavian Brake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Brake has no effect on the direction of Dow Jones i.e., Dow Jones and Scandinavian Brake go up and down completely randomly.
Pair Corralation between Dow Jones and Scandinavian Brake
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.21 times more return on investment than Scandinavian Brake. However, Dow Jones Industrial is 4.78 times less risky than Scandinavian Brake. It trades about 0.08 of its potential returns per unit of risk. Scandinavian Brake Systems is currently generating about 0.01 per unit of risk. If you would invest 3,408,927 in Dow Jones Industrial on November 5, 2024 and sell it today you would earn a total of 1,045,539 from holding Dow Jones Industrial or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Dow Jones Industrial vs. Scandinavian Brake Systems
Performance |
| Timeline |
Dow Jones and Scandinavian Brake Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Scandinavian Brake Systems
Pair trading matchups for Scandinavian Brake
Pair Trading with Dow Jones and Scandinavian Brake
The main advantage of trading using opposite Dow Jones and Scandinavian Brake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Scandinavian Brake 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 Scandinavian Brake will offset losses from the drop in Scandinavian Brake's long position.The idea behind Dow Jones Industrial and Scandinavian Brake Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Scandinavian Brake vs. SKAKO AS | Scandinavian Brake vs. Newcap Holding AS | Scandinavian Brake vs. Columbus AS | Scandinavian Brake vs. Rovsing AS |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |