Correlation Between Thales SA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Thales SA 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 Thales SA and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thales SA ADR and Dow Jones Industrial, you can compare the effects of market volatilities on Thales SA 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 Thales SA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Dow Jones.
Diversification Opportunities for Thales SA and Dow Jones
Modest diversification
The 3 months correlation between Thales and Dow is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA ADR 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 Thales SA 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 Thales SA ADR 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 Thales SA i.e., Thales SA and Dow Jones go up and down completely randomly.
Pair Corralation between Thales SA and Dow Jones
Assuming the 90 days horizon Thales SA is expected to generate 1.04 times less return on investment than Dow Jones. In addition to that, Thales SA is 2.21 times more volatile than Dow Jones Industrial. It trades about 0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,359,792 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 1,113,865 from holding Dow Jones Industrial or generate 33.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Thales SA ADR vs. Dow Jones Industrial
Performance |
Timeline |
Thales SA and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Thales SA ADR
Pair trading matchups for Thales SA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Thales SA and Dow Jones
The main advantage of trading using opposite Thales SA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA 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.Thales SA vs. Moog Inc | Thales SA vs. BAE Systems PLC | Thales SA vs. Park Electrochemical | Thales SA vs. Triumph Group |
Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Stocks Directory Find actively traded stocks across global markets |