Correlation Between Themes Transatlantic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Themes Transatlantic 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 Themes Transatlantic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Themes Transatlantic Defense and Dow Jones Industrial, you can compare the effects of market volatilities on Themes Transatlantic 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 Themes Transatlantic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themes Transatlantic and Dow Jones.
Diversification Opportunities for Themes Transatlantic and Dow Jones
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Themes and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Themes Transatlantic Defense 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 Themes Transatlantic 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 Themes Transatlantic Defense 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 Themes Transatlantic i.e., Themes Transatlantic and Dow Jones go up and down completely randomly.
Pair Corralation between Themes Transatlantic and Dow Jones
Given the investment horizon of 90 days Themes Transatlantic Defense is expected to generate 1.2 times more return on investment than Dow Jones. However, Themes Transatlantic is 1.2 times more volatile than Dow Jones Industrial. It trades about 0.28 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 2,556 in Themes Transatlantic Defense on October 23, 2024 and sell it today you would earn a total of 129.08 from holding Themes Transatlantic Defense or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Themes Transatlantic Defense vs. Dow Jones Industrial
Performance |
| Timeline |
Themes Transatlantic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Themes Transatlantic Defense
Pair trading matchups for Themes Transatlantic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Themes Transatlantic and Dow Jones
The main advantage of trading using opposite Themes Transatlantic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Themes Transatlantic 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.| Themes Transatlantic vs. First Trust Indxx | Themes Transatlantic vs. Direxion Daily Industrials | Themes Transatlantic vs. FlexShares STOXX Global | Themes Transatlantic vs. Select STOXX Europe |
| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |