Correlation Between Schnapp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Schnapp 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 Schnapp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schnapp and Dow Jones Industrial, you can compare the effects of market volatilities on Schnapp 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 Schnapp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schnapp and Dow Jones.
Diversification Opportunities for Schnapp and Dow Jones
Very weak diversification
The 3 months correlation between Schnapp and Dow is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Schnapp 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 Schnapp 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 Schnapp 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 Schnapp i.e., Schnapp and Dow Jones go up and down completely randomly.
Pair Corralation between Schnapp and Dow Jones
Assuming the 90 days trading horizon Schnapp is expected to generate 3.87 times more return on investment than Dow Jones. However, Schnapp is 3.87 times more volatile than Dow Jones Industrial. It trades about 0.25 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 121,758 in Schnapp on September 12, 2024 and sell it today you would earn a total of 44,242 from holding Schnapp or generate 36.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.88% |
| Values | Daily Returns |
Schnapp vs. Dow Jones Industrial
Performance |
| Timeline |
Schnapp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Schnapp
Pair trading matchups for Schnapp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Schnapp and Dow Jones
The main advantage of trading using opposite Schnapp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schnapp 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.| Schnapp vs. Migdal Insurance | Schnapp vs. Clal Insurance Enterprises | Schnapp vs. Bank Leumi Le Israel | Schnapp vs. Israel Discount Bank |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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