Correlation Between Dow Jones and 05565EAH8

Can any of the company-specific risk be diversified away by investing in both Dow Jones and 05565EAH8 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 Dow Jones and 05565EAH8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dow Jones Industrial and BMW 28 11 APR 26, you can compare the effects of market volatilities on Dow Jones and 05565EAH8 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 Dow Jones with a short position of 05565EAH8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and 05565EAH8.

Diversification Opportunities for Dow Jones and 05565EAH8

-0.04

Correlation Coefficient

Dow Jones  05565EAH8

Good diversification

The 3 months correlation between Dow and 05565EAH8 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and BMW 28 11 APR 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMW 28 11 and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with 05565EAH8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMW 28 11 has no effect on the direction of Dow Jones i.e., Dow Jones and 05565EAH8 go up and down completely randomly.

Pair Corralation between Dow Jones and 05565EAH8

Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the 05565EAH8. In addition to that, Dow Jones is 3.79 times more volatile than BMW 28 11 APR 26. It trades about -0.22 of its total potential returns per unit of risk. BMW 28 11 APR 26 is currently generating about -0.27 per unit of volatility. If you would invest  9,776  in BMW 28 11 APR 26 on September 27, 2024 and sell it today you would lose (64.00) from holding BMW 28 11 APR 26 or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.09%
Values	Daily Returns

Dow Jones Industrial  vs.  BMW 28 11 APR 26

Pair Trading with Dow Jones and 05565EAH8

The main advantage of trading using opposite Dow Jones and 05565EAH8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, 05565EAH8 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 05565EAH8 will offset losses from the drop in 05565EAH8's long position.

The idea behind Dow Jones Industrial and BMW 28 11 APR 26 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.