Correlation Between Alten SA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Alten 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 Alten 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 Alten SA and Dow Jones Industrial, you can compare the effects of market volatilities on Alten 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 Alten SA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alten SA and Dow Jones.
Diversification Opportunities for Alten SA and Dow Jones
Excellent diversification
The 3 months correlation between Alten and Dow is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alten SA 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 Alten 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 Alten SA 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 Alten SA i.e., Alten SA and Dow Jones go up and down completely randomly.
Pair Corralation between Alten SA and Dow Jones
Assuming the 90 days trading horizon Alten SA is expected to under-perform the Dow Jones. In addition to that, Alten SA is 2.9 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of volatility. If you would invest 4,082,959 in Dow Jones Industrial on September 7, 2024 and sell it today you would earn a total of 393,612 from holding Dow Jones Industrial or generate 9.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Alten SA vs. Dow Jones Industrial
Performance |
Timeline |
Alten SA and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Alten SA
Pair trading matchups for Alten SA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Alten SA and Dow Jones
The main advantage of trading using opposite Alten SA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alten 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.Alten SA vs. Sopra Steria Group | Alten SA vs. Teleperformance SE | Alten SA vs. Capgemini SE | Alten SA vs. Aubay Socit Anonyme |
Dow Jones vs. NI Holdings | Dow Jones vs. GMS Inc | Dow Jones vs. QBE Insurance Group | Dow Jones vs. Direct Line Insurance |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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