Correlation Between BNPP EHY and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BNPP EHY 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 BNPP EHY and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNPP EHY SRI and Dow Jones Industrial, you can compare the effects of market volatilities on BNPP EHY 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 BNPP EHY with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNPP EHY and Dow Jones.
Diversification Opportunities for BNPP EHY and Dow Jones
Almost no diversification
The 3 months correlation between BNPP and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BNPP EHY SRI 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 BNPP EHY 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 BNPP EHY SRI 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 BNPP EHY i.e., BNPP EHY and Dow Jones go up and down completely randomly.
Pair Corralation between BNPP EHY and Dow Jones
Assuming the 90 days trading horizon BNPP EHY is expected to generate 3.9 times less return on investment than Dow Jones. But when comparing it to its historical volatility, BNPP EHY SRI is 4.52 times less risky than Dow Jones. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.9% |
| Values | Daily Returns |
BNPP EHY SRI vs. Dow Jones Industrial
Performance |
| Timeline |
BNPP EHY and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BNPP EHY SRI
Pair trading matchups for BNPP EHY
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BNPP EHY and Dow Jones
The main advantage of trading using opposite BNPP EHY and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNPP EHY 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.| BNPP EHY vs. Amundi Index Solutions | BNPP EHY vs. Manitou BF SA | BNPP EHY vs. Ossiam Minimum Variance | BNPP EHY vs. Granite 3x LVMH |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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