Correlation Between EssilorLuxottica and Dow Jones
Can any of the company-specific risk be diversified away by investing in both EssilorLuxottica and Dow Jones 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 EssilorLuxottica and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EssilorLuxottica Socit anonyme and Dow Jones Industrial, you can compare the effects of market volatilities on EssilorLuxottica and Dow Jones 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 EssilorLuxottica with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Dow Jones.
Diversification Opportunities for EssilorLuxottica and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EssilorLuxottica and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica Socit anonyme and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and EssilorLuxottica 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 EssilorLuxottica Socit anonyme are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Dow Jones go up and down completely randomly.
Pair Corralation between EssilorLuxottica and Dow Jones
Assuming the 90 days horizon EssilorLuxottica Socit anonyme is expected to generate 1.66 times more return on investment than Dow Jones. However, EssilorLuxottica is 1.66 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 17,355 in EssilorLuxottica Socit anonyme on August 26, 2024 and sell it today you would earn a total of 6,255 from holding EssilorLuxottica Socit anonyme or generate 36.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.52% |
| Values | Daily Returns |
EssilorLuxottica Socit anonyme vs. Dow Jones Industrial
Performance |
| Timeline |
EssilorLuxottica and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
EssilorLuxottica Socit anonyme
Pair trading matchups for EssilorLuxottica
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with EssilorLuxottica and Dow Jones
The main advantage of trading using opposite EssilorLuxottica and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EssilorLuxottica position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| EssilorLuxottica vs. PTT Global Chemical | EssilorLuxottica vs. Ryanair Holdings plc | EssilorLuxottica vs. Alaska Air Group | EssilorLuxottica vs. SHIN ETSU CHEMICAL |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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