Correlation Between Dow Jones and Xbrane Biopharma
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Xbrane Biopharma 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 Xbrane Biopharma 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 Xbrane Biopharma AB, you can compare the effects of market volatilities on Dow Jones and Xbrane Biopharma 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 Xbrane Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Xbrane Biopharma.
Diversification Opportunities for Dow Jones and Xbrane Biopharma
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Xbrane is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Xbrane Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xbrane Biopharma 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 Xbrane Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xbrane Biopharma has no effect on the direction of Dow Jones i.e., Dow Jones and Xbrane Biopharma go up and down completely randomly.
Pair Corralation between Dow Jones and Xbrane Biopharma
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.04 times more return on investment than Xbrane Biopharma. However, Dow Jones Industrial is 24.89 times less risky than Xbrane Biopharma. It trades about 0.15 of its potential returns per unit of risk. Xbrane Biopharma AB is currently generating about -0.01 per unit of risk. If you would invest 3,409,586 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,081,479 from holding Dow Jones Industrial or generate 31.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.9% |
| Values | Daily Returns |
Dow Jones Industrial vs. Xbrane Biopharma AB
Performance |
| Timeline |
Dow Jones and Xbrane Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Xbrane Biopharma AB
Pair trading matchups for Xbrane Biopharma
Pair Trading with Dow Jones and Xbrane Biopharma
The main advantage of trading using opposite Dow Jones and Xbrane Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Xbrane Biopharma 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 Xbrane Biopharma will offset losses from the drop in Xbrane Biopharma's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Xbrane Biopharma vs. Kancera AB | Xbrane Biopharma vs. Cyxone AB | Xbrane Biopharma vs. Lidds AB | Xbrane Biopharma vs. Cantargia AB |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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