Correlation Between UmweltBank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both UmweltBank 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 UmweltBank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UmweltBank AG and Dow Jones Industrial, you can compare the effects of market volatilities on UmweltBank 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 UmweltBank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of UmweltBank and Dow Jones.
Diversification Opportunities for UmweltBank and Dow Jones
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UmweltBank and Dow is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank 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 UmweltBank 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 UmweltBank 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 UmweltBank i.e., UmweltBank and Dow Jones go up and down completely randomly.
Pair Corralation between UmweltBank and Dow Jones
Assuming the 90 days trading horizon UmweltBank AG is expected to generate 3.02 times more return on investment than Dow Jones. However, UmweltBank is 3.02 times more volatile than Dow Jones Industrial. It trades about -0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.21 per unit of risk. If you would invest 618.00 in UmweltBank AG on October 12, 2024 and sell it today you would lose (12.00) from holding UmweltBank AG or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
UmweltBank AG vs. Dow Jones Industrial
Performance |
| Timeline |
UmweltBank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
UmweltBank AG
Pair trading matchups for UmweltBank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with UmweltBank and Dow Jones
The main advantage of trading using opposite UmweltBank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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.| UmweltBank vs. Shenandoah Telecommunications | UmweltBank vs. CRISPR Therapeutics AG | UmweltBank vs. Laureate Education | UmweltBank vs. Grand Canyon Education |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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