Correlation Between Admiral Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Admiral Group 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 Admiral Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group plc and Dow Jones Industrial, you can compare the effects of market volatilities on Admiral Group 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 Admiral Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Dow Jones.
Diversification Opportunities for Admiral Group and Dow Jones
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Admiral and Dow is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group plc 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 Admiral Group 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 Admiral Group plc 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 Admiral Group i.e., Admiral Group and Dow Jones go up and down completely randomly.
Pair Corralation between Admiral Group and Dow Jones
Assuming the 90 days horizon Admiral Group plc is expected to under-perform the Dow Jones. In addition to that, Admiral Group is 1.48 times more volatile than Dow Jones Industrial. It trades about -0.12 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.3 per unit of volatility. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 276,911 from holding Dow Jones Industrial or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Admiral Group plc vs. Dow Jones Industrial
Performance |
| Timeline |
Admiral Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Admiral Group plc
Pair trading matchups for Admiral Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Admiral Group and Dow Jones
The main advantage of trading using opposite Admiral Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group 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.| Admiral Group vs. The Progressive | Admiral Group vs. Fairfax Financial Holdings | Admiral Group vs. Insurance Australia Group |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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