Correlation Between Herkules and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Herkules 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 Herkules and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herkules SA and Dow Jones Industrial, you can compare the effects of market volatilities on Herkules 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 Herkules with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herkules and Dow Jones.
Diversification Opportunities for Herkules and Dow Jones
Excellent diversification
The 3 months correlation between Herkules and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Herkules SA 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 Herkules 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 Herkules SA 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 Herkules i.e., Herkules and Dow Jones go up and down completely randomly.
Pair Corralation between Herkules and Dow Jones
Assuming the 90 days trading horizon Herkules SA is expected to under-perform the Dow Jones. In addition to that, Herkules is 2.25 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of volatility. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Herkules SA vs. Dow Jones Industrial
Performance |
| Timeline |
Herkules and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Herkules SA
Pair trading matchups for Herkules
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Herkules and Dow Jones
The main advantage of trading using opposite Herkules and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herkules 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.| Herkules vs. Gaming Factory SA | Herkules vs. CI Games SA | Herkules vs. GreenX Metals | Herkules vs. PMPG Polskie Media |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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