Correlation Between RHI Magnesita and Dow Jones
Can any of the company-specific risk be diversified away by investing in both RHI Magnesita 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 RHI Magnesita and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RHI Magnesita NV and Dow Jones Industrial, you can compare the effects of market volatilities on RHI Magnesita 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 RHI Magnesita with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHI Magnesita and Dow Jones.
Diversification Opportunities for RHI Magnesita and Dow Jones
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RHI and Dow is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding RHI Magnesita NV 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 RHI Magnesita 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 RHI Magnesita NV 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 RHI Magnesita i.e., RHI Magnesita and Dow Jones go up and down completely randomly.
Pair Corralation between RHI Magnesita and Dow Jones
Assuming the 90 days trading horizon RHI Magnesita NV is expected to generate 1.65 times more return on investment than Dow Jones. However, RHI Magnesita is 1.65 times more volatile than Dow Jones Industrial. It trades about 0.29 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 3,830 in RHI Magnesita NV on October 23, 2024 and sell it today you would earn a total of 250.00 from holding RHI Magnesita NV or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
RHI Magnesita NV vs. Dow Jones Industrial
Performance |
| Timeline |
RHI Magnesita and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
RHI Magnesita NV
Pair trading matchups for RHI Magnesita
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with RHI Magnesita and Dow Jones
The main advantage of trading using opposite RHI Magnesita and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHI Magnesita 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.| RHI Magnesita vs. AT S Austria | RHI Magnesita vs. Wienerberger AG | RHI Magnesita vs. Lenzing Aktiengesellschaft | RHI Magnesita vs. Voestalpine AG |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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