Correlation Between Nel ASA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nel 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 Nel 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 Nel ASA and Dow Jones Industrial, you can compare the effects of market volatilities on Nel 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 Nel ASA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Dow Jones.
Diversification Opportunities for Nel ASA and Dow Jones
Pay attention - limited upside
The 3 months correlation between Nel and Dow is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nel 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 Nel 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 Nel 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 Nel ASA i.e., Nel ASA and Dow Jones go up and down completely randomly.
Pair Corralation between Nel ASA and Dow Jones
Assuming the 90 days horizon Nel ASA is expected to under-perform the Dow Jones. In addition to that, Nel ASA is 7.47 times more volatile than Dow Jones Industrial. It trades about -0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of volatility. If you would invest 3,541,698 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 845,337 from holding Dow Jones Industrial or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Nel ASA vs. Dow Jones Industrial
Performance |
| Timeline |
Nel ASA and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nel ASA
Pair trading matchups for Nel ASA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nel ASA and Dow Jones
The main advantage of trading using opposite Nel ASA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel 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.| Nel ASA vs. Aumann AG | Nel ASA vs. Arista Power | Nel ASA vs. Atlas Copco AB | Nel ASA vs. American Commerce Solutions |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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