Correlation Between Swiss Re and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Swiss Re 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 Swiss Re and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Re AG and Dow Jones Industrial, you can compare the effects of market volatilities on Swiss Re 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 Swiss Re with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Re and Dow Jones.
Diversification Opportunities for Swiss Re and Dow Jones
Weak diversification
The 3 months correlation between Swiss and Dow is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Re AG 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 Swiss Re 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 Swiss Re AG 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 Swiss Re i.e., Swiss Re and Dow Jones go up and down completely randomly.
Pair Corralation between Swiss Re and Dow Jones
Assuming the 90 days trading horizon Swiss Re AG is expected to generate 3.45 times more return on investment than Dow Jones. However, Swiss Re is 3.45 times more volatile than Dow Jones Industrial. It trades about -0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.24 per unit of risk. If you would invest 3,500 in Swiss Re AG on October 10, 2024 and sell it today you would lose (40.00) from holding Swiss Re AG or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Swiss Re AG vs. Dow Jones Industrial
Performance |
| Timeline |
Swiss Re and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Re AG
Pair trading matchups for Swiss Re
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Swiss Re and Dow Jones
The main advantage of trading using opposite Swiss Re and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Re 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.| Swiss Re vs. Direct Line Insurance | Swiss Re vs. MAGNUM MINING EXP | Swiss Re vs. GREENX METALS LTD | Swiss Re vs. ARDAGH METAL PACDL 0001 |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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