Correlation Between Mentice AB and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Mentice AB 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 Mentice AB and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mentice AB and Dow Jones Industrial, you can compare the effects of market volatilities on Mentice AB 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 Mentice AB with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mentice AB and Dow Jones.
Diversification Opportunities for Mentice AB and Dow Jones
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mentice and Dow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mentice 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 Mentice AB 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 Mentice 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 Mentice AB i.e., Mentice AB and Dow Jones go up and down completely randomly.
Pair Corralation between Mentice AB and Dow Jones
Assuming the 90 days trading horizon Mentice AB is expected to under-perform the Dow Jones. In addition to that, Mentice AB is 4.99 times more volatile than Dow Jones Industrial. It trades about -0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,312,774 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,116,877 from holding Dow Jones Industrial or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.49% |
| Values | Daily Returns |
Mentice AB vs. Dow Jones Industrial
Performance |
| Timeline |
Mentice AB and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Mentice AB
Pair trading matchups for Mentice AB
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Mentice AB and Dow Jones
The main advantage of trading using opposite Mentice AB and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mentice AB 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.| Mentice AB vs. Surgical Science Sweden | Mentice AB vs. C Rad AB | Mentice AB vs. Xvivo Perfusion AB | Mentice AB vs. Biotage AB |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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