Correlation Between Image Systems and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Image Systems 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 Image Systems and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Image Systems AB and Dow Jones Industrial, you can compare the effects of market volatilities on Image Systems 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 Image Systems with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Image Systems and Dow Jones.
Diversification Opportunities for Image Systems and Dow Jones
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Image and Dow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Image Systems AB 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 Image Systems 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 Image Systems AB 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 Image Systems i.e., Image Systems and Dow Jones go up and down completely randomly.
Pair Corralation between Image Systems and Dow Jones
Assuming the 90 days horizon Image Systems AB is expected to generate 5.7 times more return on investment than Dow Jones. However, Image Systems is 5.7 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 127.00 in Image Systems AB on August 31, 2024 and sell it today you would earn a total of 62.00 from holding Image Systems AB or generate 48.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Image Systems AB vs. Dow Jones Industrial
Performance |
| Timeline |
Image Systems and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Image Systems AB
Pair trading matchups for Image Systems
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Image Systems and Dow Jones
The main advantage of trading using opposite Image Systems and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Image Systems 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.| Image Systems vs. Precise Biometrics AB | Image Systems vs. Anoto Group AB | Image Systems vs. Bong AB | Image Systems vs. Episurf Medical AB |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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