Correlation Between DOLFINES and Dow Jones
Can any of the company-specific risk be diversified away by investing in both DOLFINES 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 DOLFINES and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DOLFINES SA EO and Dow Jones Industrial, you can compare the effects of market volatilities on DOLFINES 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 DOLFINES with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOLFINES and Dow Jones.
Diversification Opportunities for DOLFINES and Dow Jones
Poor diversification
The 3 months correlation between DOLFINES and Dow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding DOLFINES SA EO 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 DOLFINES 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 DOLFINES SA EO 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 DOLFINES i.e., DOLFINES and Dow Jones go up and down completely randomly.
Pair Corralation between DOLFINES and Dow Jones
Assuming the 90 days trading horizon DOLFINES SA EO is expected to generate 206.37 times more return on investment than Dow Jones. However, DOLFINES is 206.37 times more volatile than Dow Jones Industrial. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.07 per unit of risk. If you would invest 50.00 in DOLFINES SA EO on September 29, 2024 and sell it today you would earn a total of 85.00 from holding DOLFINES SA EO or generate 170.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.01% |
| Values | Daily Returns |
DOLFINES SA EO vs. Dow Jones Industrial
Performance |
| Timeline |
DOLFINES and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
DOLFINES SA EO
Pair trading matchups for DOLFINES
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with DOLFINES and Dow Jones
The main advantage of trading using opposite DOLFINES and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOLFINES 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.| DOLFINES vs. Nordic Semiconductor ASA | DOLFINES vs. Elmos Semiconductor SE | DOLFINES vs. HK Electric Investments | DOLFINES vs. ON SEMICONDUCTOR |
| Dow Jones vs. Dana Inc | Dow Jones vs. Wabash National | Dow Jones vs. BRP Inc | Dow Jones vs. ArcelorMittal SA ADR |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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