Correlation Between Dow Jones and SECITS Holding
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SECITS 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 SECITS 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 SECITS Holding AB, you can compare the effects of market volatilities on Dow Jones and SECITS 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 SECITS Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SECITS Holding.
Diversification Opportunities for Dow Jones and SECITS Holding
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and SECITS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS 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 SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Dow Jones i.e., Dow Jones and SECITS Holding go up and down completely randomly.
Pair Corralation between Dow Jones and SECITS Holding
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.35 times less return on investment than SECITS Holding. But when comparing it to its historical volatility, Dow Jones Industrial is 17.25 times less risky than SECITS Holding. It trades about 0.37 of its potential returns per unit of risk. SECITS Holding AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.00 in SECITS Holding AB on September 1, 2024 and sell it today you would earn a total of 0.04 from holding SECITS Holding AB or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. SECITS Holding AB
Performance |
| Timeline |
Dow Jones and SECITS Holding Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SECITS Holding AB
Pair trading matchups for SECITS Holding
Pair Trading with Dow Jones and SECITS Holding
The main advantage of trading using opposite Dow Jones and SECITS Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SECITS 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 SECITS Holding will offset losses from the drop in SECITS Holding's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| SECITS Holding vs. DevPort AB | SECITS Holding vs. B3 Consulting Group | SECITS Holding vs. Micro Systemation 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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