Correlation Between Dow Jones and Swiss Life
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Swiss Life 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 Swiss Life 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 Swiss Life Holding, you can compare the effects of market volatilities on Dow Jones and Swiss Life 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 Swiss Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Swiss Life.
Diversification Opportunities for Dow Jones and Swiss Life
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Swiss is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding 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 Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of Dow Jones i.e., Dow Jones and Swiss Life go up and down completely randomly.
Pair Corralation between Dow Jones and Swiss Life
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.57 times more return on investment than Swiss Life. However, Dow Jones Industrial is 1.76 times less risky than Swiss Life. It trades about 0.2 of its potential returns per unit of risk. Swiss Life Holding is currently generating about 0.04 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Swiss Life Holding
Performance |
| Timeline |
Dow Jones and Swiss Life Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Swiss Life Holding
Pair trading matchups for Swiss Life
Pair Trading with Dow Jones and Swiss Life
The main advantage of trading using opposite Dow Jones and Swiss Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Swiss Life 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 Swiss Life will offset losses from the drop in Swiss Life's long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Swiss Life vs. ageas SANV | Swiss Life vs. Athene Holding | Swiss Life vs. Sampo OYJ | Swiss Life vs. Athene Holding |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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