Correlation Between ROCKWOOL International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ROCKWOOL International 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 ROCKWOOL International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROCKWOOL International AS and Dow Jones Industrial, you can compare the effects of market volatilities on ROCKWOOL International 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 ROCKWOOL International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROCKWOOL International and Dow Jones.
Diversification Opportunities for ROCKWOOL International and Dow Jones
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between ROCKWOOL and Dow is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International AS 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 ROCKWOOL International 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 ROCKWOOL International AS 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 ROCKWOOL International i.e., ROCKWOOL International and Dow Jones go up and down completely randomly.
Pair Corralation between ROCKWOOL International and Dow Jones
Assuming the 90 days trading horizon ROCKWOOL International AS is expected to under-perform the Dow Jones. In addition to that, ROCKWOOL International is 2.94 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
ROCKWOOL International AS vs. Dow Jones Industrial
Performance |
| Timeline |
ROCKWOOL International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ROCKWOOL International AS
Pair trading matchups for ROCKWOOL International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ROCKWOOL International and Dow Jones
The main advantage of trading using opposite ROCKWOOL International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROCKWOOL International 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.| ROCKWOOL International vs. ROCKWOOL International AS | ROCKWOOL International vs. FLSmidth Co | ROCKWOOL International vs. Royal Unibrew AS | ROCKWOOL International vs. Tryg AS |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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