Correlation Between Bayer AG and Dow Jones
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By analyzing existing cross correlation between Bayer AG NA and Dow Jones Industrial, you can compare the effects of market volatilities on Bayer AG 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 Bayer AG with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayer AG and Dow Jones.
Diversification Opportunities for Bayer AG and Dow Jones
Pay attention - limited upside
The 3 months correlation between Bayer and Dow is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bayer AG NA 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 Bayer AG 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 Bayer AG NA 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 Bayer AG i.e., Bayer AG and Dow Jones go up and down completely randomly.
Pair Corralation between Bayer AG and Dow Jones
Assuming the 90 days trading horizon Bayer AG NA is expected to under-perform the Dow Jones. In addition to that, Bayer AG is 3.01 times more volatile than Dow Jones Industrial. It trades about -0.24 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.02 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on September 23, 2024 and sell it today you would earn a total of 32,531 from holding Dow Jones Industrial or generate 0.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 97.73% |
Values | Daily Returns |
Bayer AG NA vs. Dow Jones Industrial
Performance |
Timeline |
Bayer AG and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Bayer AG NA
Pair trading matchups for Bayer AG
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Bayer AG and Dow Jones
The main advantage of trading using opposite Bayer AG and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayer AG 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.Bayer AG vs. Rayonier Advanced Materials | Bayer AG vs. Heidelberg Materials AG | Bayer AG vs. Eagle Materials | Bayer AG vs. Westinghouse Air Brake |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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