Correlation Between Dow Jones and YPF SA
Can any of the company-specific risk be diversified away by investing in both Dow Jones and YPF SA 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 YPF SA 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 YPF SA D, you can compare the effects of market volatilities on Dow Jones and YPF SA 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 YPF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and YPF SA.
Diversification Opportunities for Dow Jones and YPF SA
Significant diversification
The 3 months correlation between Dow and YPF is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and YPF SA D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YPF SA D 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 YPF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YPF SA D has no effect on the direction of Dow Jones i.e., Dow Jones and YPF SA go up and down completely randomly.
Pair Corralation between Dow Jones and YPF SA
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.04 times less return on investment than YPF SA. But when comparing it to its historical volatility, Dow Jones Industrial is 3.39 times less risky than YPF SA. It trades about 0.12 of its potential returns per unit of risk. YPF SA D is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,042,500 in YPF SA D on November 2, 2024 and sell it today you would earn a total of 1,702,500 from holding YPF SA D or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. YPF SA D
Performance |
| Timeline |
Dow Jones and YPF SA Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
YPF SA D
Pair trading matchups for YPF SA
Pair Trading with Dow Jones and YPF SA
The main advantage of trading using opposite Dow Jones and YPF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, YPF SA 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 YPF SA will offset losses from the drop in YPF SA's long position.| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
| YPF SA vs. Grupo Financiero Galicia | YPF SA vs. Pampa Energia SA | YPF SA vs. Banco Macro SA | YPF SA vs. Aluar Aluminio Argentino |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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