Correlation Between Reckitt Benckiser and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser 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 Reckitt Benckiser and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and Dow Jones Industrial, you can compare the effects of market volatilities on Reckitt Benckiser 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 Reckitt Benckiser with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Dow Jones.
Diversification Opportunities for Reckitt Benckiser and Dow Jones
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Reckitt and Dow is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group 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 Reckitt Benckiser 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 Reckitt Benckiser Group 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 Reckitt Benckiser i.e., Reckitt Benckiser and Dow Jones go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and Dow Jones
Assuming the 90 days horizon Reckitt Benckiser Group is expected to generate 2.61 times more return on investment than Dow Jones. However, Reckitt Benckiser is 2.61 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.1 per unit of risk. If you would invest 6,050 in Reckitt Benckiser Group on December 5, 2024 and sell it today you would earn a total of 617.00 from holding Reckitt Benckiser Group or generate 10.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 91.67% |
Values | Daily Returns |
Reckitt Benckiser Group vs. Dow Jones Industrial
Performance |
Timeline |
Reckitt Benckiser and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Reckitt Benckiser Group
Pair trading matchups for Reckitt Benckiser
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Reckitt Benckiser and Dow Jones
The main advantage of trading using opposite Reckitt Benckiser and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser 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.Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
Dow Jones vs. Ecovyst | Dow Jones vs. ioneer Ltd American | Dow Jones vs. Eastman Chemical | Dow Jones vs. Zijin Mining Group |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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