Correlation Between MTU Aero and Dow Jones
Can any of the company-specific risk be diversified away by investing in both MTU Aero 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 MTU Aero and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTU Aero Engines and Dow Jones Industrial, you can compare the effects of market volatilities on MTU Aero 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 MTU Aero with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTU Aero and Dow Jones.
Diversification Opportunities for MTU Aero and Dow Jones
Weak diversification
The 3 months correlation between MTU and Dow is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MTU Aero Engines 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 MTU Aero 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 MTU Aero Engines 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 MTU Aero i.e., MTU Aero and Dow Jones go up and down completely randomly.
Pair Corralation between MTU Aero and Dow Jones
Assuming the 90 days horizon MTU Aero Engines is expected to generate 1.29 times more return on investment than Dow Jones. However, MTU Aero is 1.29 times more volatile than Dow Jones Industrial. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 16,767 in MTU Aero Engines on October 21, 2024 and sell it today you would earn a total of 424.00 from holding MTU Aero Engines or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
MTU Aero Engines vs. Dow Jones Industrial
Performance |
| Timeline |
MTU Aero and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
MTU Aero Engines
Pair trading matchups for MTU Aero
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with MTU Aero and Dow Jones
The main advantage of trading using opposite MTU Aero and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTU Aero 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.| MTU Aero vs. Safran SA | MTU Aero vs. MTU Aero Engines | MTU Aero vs. Thales SA ADR | MTU Aero vs. Hannover Re |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Transaction History View history of all your transactions and understand their impact on performance |