Correlation Between Evotec SE and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Evotec SE 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 Evotec SE and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evotec SE and Dow Jones Industrial, you can compare the effects of market volatilities on Evotec SE 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 Evotec SE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Dow Jones.
Diversification Opportunities for Evotec SE and Dow Jones
Poor diversification
The 3 months correlation between Evotec and Dow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE 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 Evotec SE 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 Evotec SE 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 Evotec SE i.e., Evotec SE and Dow Jones go up and down completely randomly.
Pair Corralation between Evotec SE and Dow Jones
Assuming the 90 days trading horizon Evotec SE is expected to generate 9.49 times more return on investment than Dow Jones. However, Evotec SE is 9.49 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 0.38 per unit of risk. If you would invest 810.00 in Evotec SE on September 3, 2024 and sell it today you would earn a total of 73.00 from holding Evotec SE or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Evotec SE vs. Dow Jones Industrial
Performance |
| Timeline |
Evotec SE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Evotec SE
Pair trading matchups for Evotec SE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Evotec SE and Dow Jones
The main advantage of trading using opposite Evotec SE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evotec SE 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.| Evotec SE vs. Merck KGaA | Evotec SE vs. CanSino Biologics | Evotec SE vs. Superior Plus Corp | Evotec SE vs. NMI Holdings |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |