Correlation Between Svenska Handelsbanken and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken 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 Svenska Handelsbanken and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken AB and Dow Jones Industrial, you can compare the effects of market volatilities on Svenska Handelsbanken 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 Svenska Handelsbanken with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Dow Jones.
Diversification Opportunities for Svenska Handelsbanken and Dow Jones
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Svenska and Dow is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB 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 Svenska Handelsbanken 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 Svenska Handelsbanken AB 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 Svenska Handelsbanken i.e., Svenska Handelsbanken and Dow Jones go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Dow Jones
Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 12.58 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 1.09 times less risky than Dow Jones. It trades about 0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.25 of returns per unit of risk over similar time horizon. 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 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Dow Jones Industrial
Performance |
| Timeline |
Svenska Handelsbanken and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Svenska Handelsbanken AB
Pair trading matchups for Svenska Handelsbanken
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Svenska Handelsbanken and Dow Jones
The main advantage of trading using opposite Svenska Handelsbanken and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken 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.| Svenska Handelsbanken vs. Svenska Handelsbanken AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Atlas Copco AB | Svenska Handelsbanken vs. Skandinaviska Enskilda Banken |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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