Correlation Between Nedbank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nedbank 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 Nedbank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nedbank Group and Dow Jones Industrial, you can compare the effects of market volatilities on Nedbank 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 Nedbank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nedbank and Dow Jones.
Diversification Opportunities for Nedbank and Dow Jones
Weak diversification
The 3 months correlation between Nedbank and Dow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group 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 Nedbank 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 Nedbank Group 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 Nedbank i.e., Nedbank and Dow Jones go up and down completely randomly.
Pair Corralation between Nedbank and Dow Jones
Assuming the 90 days trading horizon Nedbank Group is expected to under-perform the Dow Jones. In addition to that, Nedbank is 1.1 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nedbank Group vs. Dow Jones Industrial
Performance |
| Timeline |
Nedbank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nedbank Group
Pair trading matchups for Nedbank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nedbank and Dow Jones
The main advantage of trading using opposite Nedbank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nedbank 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.| Nedbank vs. Advtech | Nedbank vs. RCL Foods | Nedbank vs. Blue Label Telecoms | Nedbank vs. Afine Investments |
| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |