Correlation Between Var Energi and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Var Energi 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 Var Energi and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Var Energi ASA and Dow Jones Industrial, you can compare the effects of market volatilities on Var Energi 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 Var Energi with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Dow Jones.
Diversification Opportunities for Var Energi and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Var and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA 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 Var Energi 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 Var Energi ASA 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 Var Energi i.e., Var Energi and Dow Jones go up and down completely randomly.
Pair Corralation between Var Energi and Dow Jones
Assuming the 90 days trading horizon Var Energi is expected to generate 1.58 times less return on investment than Dow Jones. In addition to that, Var Energi is 1.71 times more volatile than Dow Jones Industrial. It trades about 0.14 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Var Energi ASA vs. Dow Jones Industrial
Performance |
| Timeline |
Var Energi and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Var Energi ASA
Pair trading matchups for Var Energi
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Var Energi and Dow Jones
The main advantage of trading using opposite Var Energi and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi 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.| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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