Correlation Between Dow Jones and Vef AB
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Vef AB 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 Vef AB 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 Vef AB, you can compare the effects of market volatilities on Dow Jones and Vef AB 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 Vef AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Vef AB.
Diversification Opportunities for Dow Jones and Vef AB
Pay attention - limited upside
The 3 months correlation between Dow and Vef is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Vef AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vef 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 Vef AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vef AB has no effect on the direction of Dow Jones i.e., Dow Jones and Vef AB go up and down completely randomly.
Pair Corralation between Dow Jones and Vef AB
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.29 times more return on investment than Vef AB. However, Dow Jones Industrial is 3.46 times less risky than Vef AB. It trades about 0.14 of its potential returns per unit of risk. Vef AB is currently generating about 0.02 per unit of risk. If you would invest 3,373,930 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 1,104,270 from holding Dow Jones Industrial or generate 32.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Dow Jones Industrial vs. Vef AB
Performance |
| Timeline |
Dow Jones and Vef AB Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Vef AB
Pair trading matchups for Vef AB
Pair Trading with Dow Jones and Vef AB
The main advantage of trading using opposite Dow Jones and Vef AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Vef AB 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 Vef AB will offset losses from the drop in Vef AB's long position.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| Vef AB vs. L E Lundbergfretagen | Vef AB vs. Industrivarden AB ser | Vef AB vs. Svenska Handelsbanken AB | Vef AB vs. Investor AB ser |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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