Correlation Between EGF Theramed and Dow Jones
Can any of the company-specific risk be diversified away by investing in both EGF Theramed 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 EGF Theramed and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EGF Theramed Health and Dow Jones Industrial, you can compare the effects of market volatilities on EGF Theramed 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 EGF Theramed with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGF Theramed and Dow Jones.
Diversification Opportunities for EGF Theramed and Dow Jones
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between EGF and Dow is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding EGF Theramed Health 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 EGF Theramed 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 EGF Theramed Health 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 EGF Theramed i.e., EGF Theramed and Dow Jones go up and down completely randomly.
Pair Corralation between EGF Theramed and Dow Jones
Assuming the 90 days horizon EGF Theramed Health is expected to generate 34.66 times more return on investment than Dow Jones. However, EGF Theramed is 34.66 times more volatile than Dow Jones Industrial. It trades about 0.27 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.24 per unit of risk. If you would invest 5.70 in EGF Theramed Health on August 26, 2024 and sell it today you would earn a total of 15.30 from holding EGF Theramed Health or generate 268.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EGF Theramed Health vs. Dow Jones Industrial
Performance |
| Timeline |
EGF Theramed and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
EGF Theramed Health
Pair trading matchups for EGF Theramed
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with EGF Theramed and Dow Jones
The main advantage of trading using opposite EGF Theramed and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGF Theramed 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.| EGF Theramed vs. GE HealthCare Technologies | EGF Theramed vs. Veeva Systems Class | EGF Theramed vs. Solventum Corp | EGF Theramed vs. HealthEquity |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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