Correlation Between Esso SAF and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Esso SAF 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 Esso SAF and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esso SAF and Dow Jones Industrial, you can compare the effects of market volatilities on Esso SAF 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 Esso SAF with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esso SAF and Dow Jones.
Diversification Opportunities for Esso SAF and Dow Jones
Very good diversification
The 3 months correlation between Esso and Dow is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF 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 Esso SAF 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 Esso SAF 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 Esso SAF i.e., Esso SAF and Dow Jones go up and down completely randomly.
Pair Corralation between Esso SAF and Dow Jones
Assuming the 90 days horizon Esso SAF is expected to generate 3.52 times more return on investment than Dow Jones. However, Esso SAF is 3.52 times more volatile than Dow Jones Industrial. It trades about 0.21 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.02 per unit of risk. If you would invest 10,460 in Esso SAF on December 27, 2024 and sell it today you would earn a total of 4,580 from holding Esso SAF or generate 43.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Esso SAF vs. Dow Jones Industrial
Performance |
Timeline |
Esso SAF and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Esso SAF
Pair trading matchups for Esso SAF
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Esso SAF and Dow Jones
The main advantage of trading using opposite Esso SAF and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esso SAF 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.Esso SAF vs. Etablissements Maurel et | Esso SAF vs. Eramet SA | Esso SAF vs. Socit BIC SA | Esso SAF vs. TotalEnergies EP Gabon |
Dow Jones vs. Pintec Technology Holdings | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. Chiba Bank Ltd | Dow Jones vs. Alvotech |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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