Correlation Between Gerresheimer and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Gerresheimer 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 Gerresheimer and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerresheimer AG and Dow Jones Industrial, you can compare the effects of market volatilities on Gerresheimer 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 Gerresheimer with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerresheimer and Dow Jones.
Diversification Opportunities for Gerresheimer and Dow Jones
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gerresheimer and Dow is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gerresheimer AG 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 Gerresheimer 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 Gerresheimer AG 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 Gerresheimer i.e., Gerresheimer and Dow Jones go up and down completely randomly.
Pair Corralation between Gerresheimer and Dow Jones
Assuming the 90 days trading horizon Gerresheimer AG is expected to under-perform the Dow Jones. In addition to that, Gerresheimer is 2.12 times more volatile than Dow Jones Industrial. It trades about -0.19 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerresheimer AG vs. Dow Jones Industrial
Performance |
| Timeline |
Gerresheimer and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Gerresheimer AG
Pair trading matchups for Gerresheimer
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Gerresheimer and Dow Jones
The main advantage of trading using opposite Gerresheimer and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerresheimer 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.| Gerresheimer vs. HOYA Corporation | Gerresheimer vs. Superior Plus Corp | Gerresheimer vs. NMI Holdings | Gerresheimer vs. SIVERS SEMICONDUCTORS AB |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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