Correlation Between Dow Jones and AllianzIM Equity
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AllianzIM Equity 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 AllianzIM Equity 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 AllianzIM Equity Buffer15, you can compare the effects of market volatilities on Dow Jones and AllianzIM Equity 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 AllianzIM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AllianzIM Equity.
Diversification Opportunities for Dow Jones and AllianzIM Equity
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and AllianzIM is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AllianzIM Equity Buffer15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzIM Equity Buffer15 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 AllianzIM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzIM Equity Buffer15 has no effect on the direction of Dow Jones i.e., Dow Jones and AllianzIM Equity go up and down completely randomly.
Pair Corralation between Dow Jones and AllianzIM Equity
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.51 times more return on investment than AllianzIM Equity. However, Dow Jones is 1.51 times more volatile than AllianzIM Equity Buffer15. It trades about 0.27 of its potential returns per unit of risk. AllianzIM Equity Buffer15 is currently generating about 0.14 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dow Jones Industrial vs. AllianzIM Equity Buffer15
Performance |
| Timeline |
Dow Jones and AllianzIM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AllianzIM Equity Buffer15
Pair trading matchups for AllianzIM Equity
Pair Trading with Dow Jones and AllianzIM Equity
The main advantage of trading using opposite Dow Jones and AllianzIM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AllianzIM Equity 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 AllianzIM Equity will offset losses from the drop in AllianzIM Equity's long position.| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
| AllianzIM Equity vs. FT Vest Equity | AllianzIM Equity vs. Northern Lights | AllianzIM Equity vs. Dimensional International High | AllianzIM Equity vs. First Trust Exchange Traded |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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