Correlation Between Dow Jones and ScandiDos
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ScandiDos 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 ScandiDos 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 ScandiDos AB, you can compare the effects of market volatilities on Dow Jones and ScandiDos 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 ScandiDos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ScandiDos.
Diversification Opportunities for Dow Jones and ScandiDos
Very good diversification
The 3 months correlation between Dow and ScandiDos is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ScandiDos AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScandiDos 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 ScandiDos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScandiDos AB has no effect on the direction of Dow Jones i.e., Dow Jones and ScandiDos go up and down completely randomly.
Pair Corralation between Dow Jones and ScandiDos
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the ScandiDos. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 4.43 times less risky than ScandiDos. The index trades about -0.19 of its potential returns per unit of risk. The ScandiDos AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 151.00 in ScandiDos AB on November 28, 2024 and sell it today you would earn a total of 2.00 from holding ScandiDos AB or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. ScandiDos AB
Performance |
| Timeline |
Dow Jones and ScandiDos Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ScandiDos AB
Pair trading matchups for ScandiDos
Pair Trading with Dow Jones and ScandiDos
The main advantage of trading using opposite Dow Jones and ScandiDos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ScandiDos 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 ScandiDos will offset losses from the drop in ScandiDos' long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| ScandiDos vs. Scibase AB | ScandiDos vs. Arcoma AB | ScandiDos vs. Lidds AB | ScandiDos vs. Clinical Laserthermia Systems |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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