Correlation Between Generic Sweden and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Generic Sweden 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 Generic Sweden and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generic Sweden publ and Dow Jones Industrial, you can compare the effects of market volatilities on Generic Sweden 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 Generic Sweden with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and Dow Jones.
Diversification Opportunities for Generic Sweden and Dow Jones
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Generic and Dow is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ 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 Generic Sweden 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 Generic Sweden publ 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 Generic Sweden i.e., Generic Sweden and Dow Jones go up and down completely randomly.
Pair Corralation between Generic Sweden and Dow Jones
Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 2.68 times more return on investment than Dow Jones. However, Generic Sweden is 2.68 times more volatile than Dow Jones Industrial. It trades about 0.28 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 4,400 in Generic Sweden publ on August 29, 2024 and sell it today you would earn a total of 740.00 from holding Generic Sweden publ or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generic Sweden publ vs. Dow Jones Industrial
Performance |
| Timeline |
Generic Sweden and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Generic Sweden publ
Pair trading matchups for Generic Sweden
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Generic Sweden and Dow Jones
The main advantage of trading using opposite Generic Sweden and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Sweden 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.| Generic Sweden vs. FormPipe Software AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Hanza AB | Generic Sweden vs. Genovis AB |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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