Correlation Between Patria Bank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Patria Bank 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 Patria Bank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patria Bank SA and Dow Jones Industrial, you can compare the effects of market volatilities on Patria Bank 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 Patria Bank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Bank and Dow Jones.
Diversification Opportunities for Patria Bank and Dow Jones
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Patria and Dow is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Patria Bank SA 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 Patria Bank 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 Patria Bank SA 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 Patria Bank i.e., Patria Bank and Dow Jones go up and down completely randomly.
Pair Corralation between Patria Bank and Dow Jones
Assuming the 90 days trading horizon Patria Bank SA is expected to under-perform the Dow Jones. In addition to that, Patria Bank is 1.75 times more volatile than Dow Jones Industrial. It trades about -0.1 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patria Bank SA vs. Dow Jones Industrial
Performance |
| Timeline |
Patria Bank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Patria Bank SA
Pair trading matchups for Patria Bank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Patria Bank and Dow Jones
The main advantage of trading using opposite Patria Bank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patria Bank 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.| Patria Bank vs. Erste Group Bank | Patria Bank vs. Digi Communications NV | Patria Bank vs. IHUNT TECHNOLOGY IMPORT EXPORT | Patria Bank vs. Safetech Innovations SA |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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