Correlation Between Naturgy Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Naturgy Energy 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 Naturgy Energy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturgy Energy Group and Dow Jones Industrial, you can compare the effects of market volatilities on Naturgy Energy 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 Naturgy Energy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturgy Energy and Dow Jones.
Diversification Opportunities for Naturgy Energy and Dow Jones
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naturgy and Dow is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Naturgy Energy Group 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 Naturgy Energy 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 Naturgy Energy Group 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 Naturgy Energy i.e., Naturgy Energy and Dow Jones go up and down completely randomly.
Pair Corralation between Naturgy Energy and Dow Jones
Assuming the 90 days horizon Naturgy Energy Group is expected to under-perform the Dow Jones. In addition to that, Naturgy Energy is 1.46 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturgy Energy Group vs. Dow Jones Industrial
Performance |
| Timeline |
Naturgy Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Naturgy Energy Group
Pair trading matchups for Naturgy Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Naturgy Energy and Dow Jones
The main advantage of trading using opposite Naturgy Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturgy Energy 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.| Naturgy Energy vs. Hong Kong and | Naturgy Energy vs. NewJersey Resources | Naturgy Energy vs. Atmos Energy | Naturgy Energy vs. Brookfield Infrastructure Corp |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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