Correlation Between Daimler Truck and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Daimler Truck 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 Daimler Truck and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daimler Truck Holding and Dow Jones Industrial, you can compare the effects of market volatilities on Daimler Truck 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 Daimler Truck with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daimler Truck and Dow Jones.
Diversification Opportunities for Daimler Truck and Dow Jones
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daimler and Dow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Daimler Truck Holding 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 Daimler Truck 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 Daimler Truck Holding 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 Daimler Truck i.e., Daimler Truck and Dow Jones go up and down completely randomly.
Pair Corralation between Daimler Truck and Dow Jones
Assuming the 90 days trading horizon Daimler Truck Holding is expected to generate 3.64 times more return on investment than Dow Jones. However, Daimler Truck is 3.64 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.07 per unit of risk. If you would invest 3,656 in Daimler Truck Holding on September 17, 2024 and sell it today you would earn a total of 59.00 from holding Daimler Truck Holding or generate 1.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Daimler Truck Holding vs. Dow Jones Industrial
Performance |
Timeline |
Daimler Truck and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Daimler Truck Holding
Pair trading matchups for Daimler Truck
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Daimler Truck and Dow Jones
The main advantage of trading using opposite Daimler Truck and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daimler Truck 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.Daimler Truck vs. Apple Inc | Daimler Truck vs. Apple Inc | Daimler Truck vs. Apple Inc | Daimler Truck vs. Apple Inc |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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