Correlation Between Dow Jones and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Egyptian Gulf 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 Egyptian Gulf 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 Egyptian Gulf Bank, you can compare the effects of market volatilities on Dow Jones and Egyptian Gulf 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 Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Egyptian Gulf.
Diversification Opportunities for Dow Jones and Egyptian Gulf
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Egyptian is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank 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 Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Dow Jones i.e., Dow Jones and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Dow Jones and Egyptian Gulf
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Egyptian Gulf. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 1.7 times less risky than Egyptian Gulf. The index trades about -0.1 of its potential returns per unit of risk. The Egyptian Gulf Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Egyptian Gulf Bank on December 5, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 81.67% |
Values | Daily Returns |
Dow Jones Industrial vs. Egyptian Gulf Bank
Performance |
Timeline |
Dow Jones and Egyptian Gulf Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Egyptian Gulf Bank
Pair trading matchups for Egyptian Gulf
Pair Trading with Dow Jones and Egyptian Gulf
The main advantage of trading using opposite Dow Jones and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Egyptian Gulf 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 Egyptian Gulf will offset losses from the drop in Egyptian Gulf's long position.Dow Jones vs. Ecovyst | Dow Jones vs. ioneer Ltd American | Dow Jones vs. Eastman Chemical | Dow Jones vs. Zijin Mining Group |
Egyptian Gulf vs. Arab Moltaka Investments | Egyptian Gulf vs. Nozha International Hospital | Egyptian Gulf vs. Delta Insurance | Egyptian Gulf vs. Egyptians For Investment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |