Correlation Between Maschinenfabrik Berthold and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Maschinenfabrik Berthold 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 Maschinenfabrik Berthold and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maschinenfabrik Berthold Hermle and Dow Jones Industrial, you can compare the effects of market volatilities on Maschinenfabrik Berthold 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 Maschinenfabrik Berthold with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maschinenfabrik Berthold and Dow Jones.
Diversification Opportunities for Maschinenfabrik Berthold and Dow Jones
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Maschinenfabrik and Dow is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Maschinenfabrik Berthold Herml 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 Maschinenfabrik Berthold 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 Maschinenfabrik Berthold Hermle 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 Maschinenfabrik Berthold i.e., Maschinenfabrik Berthold and Dow Jones go up and down completely randomly.
Pair Corralation between Maschinenfabrik Berthold and Dow Jones
Assuming the 90 days trading horizon Maschinenfabrik Berthold Hermle is expected to generate 3.23 times more return on investment than Dow Jones. However, Maschinenfabrik Berthold is 3.23 times more volatile than Dow Jones Industrial. It trades about 0.35 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.16 per unit of risk. If you would invest 16,000 in Maschinenfabrik Berthold Hermle on December 1, 2024 and sell it today you would earn a total of 3,000 from holding Maschinenfabrik Berthold Hermle or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Maschinenfabrik Berthold Herml vs. Dow Jones Industrial
Performance |
| Timeline |
Maschinenfabrik Berthold and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Maschinenfabrik Berthold Hermle
Pair trading matchups for Maschinenfabrik Berthold
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Maschinenfabrik Berthold and Dow Jones
The main advantage of trading using opposite Maschinenfabrik Berthold and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maschinenfabrik Berthold 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.| Maschinenfabrik Berthold vs. SIERRA METALS | Maschinenfabrik Berthold vs. Ebro Foods SA | Maschinenfabrik Berthold vs. ARDAGH METAL PACDL 0001 | Maschinenfabrik Berthold vs. CORNISH METALS INC |
| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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