Correlation Between Atea ASA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Atea ASA 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 Atea ASA and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atea ASA and Dow Jones Industrial, you can compare the effects of market volatilities on Atea ASA 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 Atea ASA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atea ASA and Dow Jones.
Diversification Opportunities for Atea ASA and Dow Jones
Average diversification
The 3 months correlation between Atea and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Atea ASA 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 Atea ASA 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 Atea ASA 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 Atea ASA i.e., Atea ASA and Dow Jones go up and down completely randomly.
Pair Corralation between Atea ASA and Dow Jones
Assuming the 90 days horizon Atea ASA is expected to generate 5.82 times more return on investment than Dow Jones. However, Atea ASA is 5.82 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 543.00 in Atea ASA on August 27, 2024 and sell it today you would earn a total of 571.00 from holding Atea ASA or generate 105.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Atea ASA vs. Dow Jones Industrial
Performance |
| Timeline |
Atea ASA and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Atea ASA
Pair trading matchups for Atea ASA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Atea ASA and Dow Jones
The main advantage of trading using opposite Atea ASA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atea ASA 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.| Atea ASA vs. Stewart Information Services | Atea ASA vs. Fidelity National Information | Atea ASA vs. Public Storage | Atea ASA vs. Cleanaway Waste Management |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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