Correlation Between SPDR Dow and Emmi AG
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and Emmi AG 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 SPDR Dow and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and Emmi AG, you can compare the effects of market volatilities on SPDR Dow and Emmi AG 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 SPDR Dow with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Emmi AG.
Diversification Opportunities for SPDR Dow and Emmi AG
Very good diversification
The 3 months correlation between SPDR and Emmi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and SPDR Dow 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 SPDR Dow Jones are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of SPDR Dow i.e., SPDR Dow and Emmi AG go up and down completely randomly.
Pair Corralation between SPDR Dow and Emmi AG
Assuming the 90 days trading horizon SPDR Dow Jones is expected to generate 0.81 times more return on investment than Emmi AG. However, SPDR Dow Jones is 1.24 times less risky than Emmi AG. It trades about 0.06 of its potential returns per unit of risk. Emmi AG is currently generating about -0.05 per unit of risk. If you would invest 1,489 in SPDR Dow Jones on September 12, 2024 and sell it today you would earn a total of 281.00 from holding SPDR Dow Jones or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. Emmi AG
Performance |
| Timeline |
| SPDR Dow Jones |
| Emmi AG |
SPDR Dow and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and Emmi AG
The main advantage of trading using opposite SPDR Dow and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, Emmi AG 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 Emmi AG will offset losses from the drop in Emmi AG's long position.| SPDR Dow vs. SPDR MSCI Europe | SPDR Dow vs. SPDR SP Utilities | SPDR Dow vs. SPDR MSCI Europe | SPDR Dow vs. SPDR MSCI EM |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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