Correlation Between Dow Jones and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Voestalpine 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 Voestalpine 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 Voestalpine AG PK, you can compare the effects of market volatilities on Dow Jones and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Voestalpine.
Diversification Opportunities for Dow Jones and Voestalpine
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Voestalpine is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Voestalpine AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG PK 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG PK has no effect on the direction of Dow Jones i.e., Dow Jones and Voestalpine go up and down completely randomly.
Pair Corralation between Dow Jones and Voestalpine
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.25 times more return on investment than Voestalpine. However, Dow Jones Industrial is 4.06 times less risky than Voestalpine. It trades about 0.11 of its potential returns per unit of risk. Voestalpine AG PK is currently generating about -0.02 per unit of risk. If you would invest 3,304,278 in Dow Jones Industrial on September 19, 2024 and sell it today you would earn a total of 1,040,712 from holding Dow Jones Industrial or generate 31.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Voestalpine AG PK
Performance |
| Timeline |
Dow Jones and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Voestalpine AG PK
Pair trading matchups for Voestalpine
Pair Trading with Dow Jones and Voestalpine
The main advantage of trading using opposite Dow Jones and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
| Voestalpine vs. Gerdau SA ADR | Voestalpine vs. Usinas Siderurgicas de | Voestalpine vs. Ternium SA ADR | Voestalpine vs. POSCO Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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