Correlation Between Demant AS and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Demant AS 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 Demant AS and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Demant AS ADR and Dow Jones Industrial, you can compare the effects of market volatilities on Demant AS 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 Demant AS with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Demant AS and Dow Jones.
Diversification Opportunities for Demant AS and Dow Jones
Pay attention - limited upside
The 3 months correlation between Demant and Dow is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Demant AS 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 Demant AS 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 Demant AS 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 Demant AS i.e., Demant AS and Dow Jones go up and down completely randomly.
Pair Corralation between Demant AS and Dow Jones
Assuming the 90 days horizon Demant AS ADR is expected to generate 2.69 times more return on investment than Dow Jones. However, Demant AS is 2.69 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 0.08 per unit of risk. If you would invest 1,451 in Demant AS ADR on August 26, 2024 and sell it today you would earn a total of 435.00 from holding Demant AS ADR or generate 29.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Demant AS ADR vs. Dow Jones Industrial
Performance |
| Timeline |
Demant AS and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Demant AS ADR
Pair trading matchups for Demant AS
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Demant AS and Dow Jones
The main advantage of trading using opposite Demant AS and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Demant AS 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.| Demant AS vs. CochLear Ltd ADR | Demant AS vs. GN Store Nord | Demant AS vs. Siemens Healthineers AG | Demant AS vs. Sonova Holding AG |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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