Correlation Between Dow Jones and SM WIRTSCHAFTSBER
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SM WIRTSCHAFTSBER 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 SM WIRTSCHAFTSBER 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 SM WIRTSCHAFTSBER N, you can compare the effects of market volatilities on Dow Jones and SM WIRTSCHAFTSBER 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 SM WIRTSCHAFTSBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SM WIRTSCHAFTSBER.
Diversification Opportunities for Dow Jones and SM WIRTSCHAFTSBER
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and SMWN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SM WIRTSCHAFTSBER N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM WIRTSCHAFTSBER 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 SM WIRTSCHAFTSBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM WIRTSCHAFTSBER has no effect on the direction of Dow Jones i.e., Dow Jones and SM WIRTSCHAFTSBER go up and down completely randomly.
Pair Corralation between Dow Jones and SM WIRTSCHAFTSBER
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.45 times more return on investment than SM WIRTSCHAFTSBER. However, Dow Jones Industrial is 2.2 times less risky than SM WIRTSCHAFTSBER. It trades about 0.08 of its potential returns per unit of risk. SM WIRTSCHAFTSBER N is currently generating about -0.01 per unit of risk. If you would invest 3,396,635 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 1,081,565 from holding Dow Jones Industrial or generate 31.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. SM WIRTSCHAFTSBER N
Performance |
| Timeline |
Dow Jones and SM WIRTSCHAFTSBER Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SM WIRTSCHAFTSBER N
Pair trading matchups for SM WIRTSCHAFTSBER
Pair Trading with Dow Jones and SM WIRTSCHAFTSBER
The main advantage of trading using opposite Dow Jones and SM WIRTSCHAFTSBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SM WIRTSCHAFTSBER 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 SM WIRTSCHAFTSBER will offset losses from the drop in SM WIRTSCHAFTSBER's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| SM WIRTSCHAFTSBER vs. TRAINLINE PLC LS | SM WIRTSCHAFTSBER vs. Consolidated Communications Holdings | SM WIRTSCHAFTSBER vs. GOLD ROAD RES | SM WIRTSCHAFTSBER vs. COMBA TELECOM SYST |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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