Correlation Between Dow Jones and Examobile

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Examobile 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 Examobile 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 Examobile SA, you can compare the effects of market volatilities on Dow Jones and Examobile 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 Examobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Examobile.

Diversification Opportunities for Dow Jones and Examobile

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dow and Examobile is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Examobile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Examobile SA 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 Examobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Examobile SA has no effect on the direction of Dow Jones i.e., Dow Jones and Examobile go up and down completely randomly.
    Optimize

Pair Corralation between Dow Jones and Examobile

Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Examobile. But the index apears to be less risky and, when comparing its historical volatility, Dow Jones Industrial is 5.12 times less risky than Examobile. The index trades about -0.21 of its potential returns per unit of risk. The Examobile SA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Examobile SA on September 23, 2024 and sell it today you would earn a total of  24.00  from holding Examobile SA or generate 7.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy33.33%
ValuesDaily Returns

Dow Jones Industrial  vs.  Examobile SA

 Performance 
       Timeline  

Dow Jones and Examobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dow Jones and Examobile

The main advantage of trading using opposite Dow Jones and Examobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Examobile 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 Examobile will offset losses from the drop in Examobile's long position.
The idea behind Dow Jones Industrial and Examobile SA 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.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.