Correlation Between Melexis NV and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Melexis NV 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 Melexis NV and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and Dow Jones Industrial, you can compare the effects of market volatilities on Melexis NV 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 Melexis NV with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and Dow Jones.
Diversification Opportunities for Melexis NV and Dow Jones
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melexis and Dow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV 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 Melexis NV 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 Melexis NV 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 Melexis NV i.e., Melexis NV and Dow Jones go up and down completely randomly.
Pair Corralation between Melexis NV and Dow Jones
Assuming the 90 days trading horizon Melexis NV is expected to under-perform the Dow Jones. In addition to that, Melexis NV is 1.91 times more volatile than Dow Jones Industrial. It trades about -0.17 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.3 per unit of volatility. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 276,911 from holding Dow Jones Industrial or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melexis NV vs. Dow Jones Industrial
Performance |
| Timeline |
Melexis NV and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Melexis NV
Pair trading matchups for Melexis NV
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Melexis NV and Dow Jones
The main advantage of trading using opposite Melexis NV and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV 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.| Melexis NV vs. Ackermans Van Haaren | Melexis NV vs. Sofina Socit Anonyme | Melexis NV vs. ageas SANV | Melexis NV vs. Barco NV |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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