Correlation Between On Holding and Dow Jones
Can any of the company-specific risk be diversified away by investing in both On Holding 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 On Holding and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between On Holding and Dow Jones Industrial, you can compare the effects of market volatilities on On Holding 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 On Holding with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of On Holding and Dow Jones.
Diversification Opportunities for On Holding and Dow Jones
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ONON and Dow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding On Holding 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 On Holding 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 On Holding 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 On Holding i.e., On Holding and Dow Jones go up and down completely randomly.
Pair Corralation between On Holding and Dow Jones
Given the investment horizon of 90 days On Holding is expected to generate 4.32 times more return on investment than Dow Jones. However, On Holding is 4.32 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 3,119 in On Holding on August 24, 2024 and sell it today you would earn a total of 2,694 from holding On Holding or generate 86.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
On Holding vs. Dow Jones Industrial
Performance |
| Timeline |
On Holding and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
On Holding
Pair trading matchups for On Holding
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with On Holding and Dow Jones
The main advantage of trading using opposite On Holding and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if On Holding 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.| On Holding vs. Crocs Inc | On Holding vs. Skechers USA | On Holding vs. Nike Inc | On Holding vs. Designer Brands |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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