Correlation Between Dow Jones and EXPRES2ION BIOTECH

Can any of the company-specific risk be diversified away by investing in both Dow Jones and EXPRES2ION BIOTECH 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 EXPRES2ION BIOTECH 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 EXPRES2ION BIOTECH HLDG, you can compare the effects of market volatilities on Dow Jones and EXPRES2ION BIOTECH 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 EXPRES2ION BIOTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and EXPRES2ION BIOTECH.

Diversification Opportunities for Dow Jones and EXPRES2ION BIOTECH

-0.68

Correlation Coefficient

Dow Jones  EXPRES2ION BIOTECH

Excellent diversification

The 3 months correlation between Dow and EXPRES2ION is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and EXPRES2ION BIOTECH HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPRES2ION BIOTECH HLDG 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 EXPRES2ION BIOTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPRES2ION BIOTECH HLDG has no effect on the direction of Dow Jones i.e., Dow Jones and EXPRES2ION BIOTECH go up and down completely randomly.

Pair Corralation between Dow Jones and EXPRES2ION BIOTECH

Assuming the 90 days trading horizon Dow Jones is expected to generate 5.48 times less return on investment than EXPRES2ION BIOTECH. But when comparing it to its historical volatility, Dow Jones Industrial is 15.87 times less risky than EXPRES2ION BIOTECH. It trades about 0.04 of its potential returns per unit of risk. EXPRES2ION BIOTECH HLDG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  260.00  in EXPRES2ION BIOTECH HLDG on September 22, 2024 and sell it today you would lose (77.00) from holding EXPRES2ION BIOTECH HLDG or give up 29.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Dow Jones Industrial  vs.  EXPRES2ION BIOTECH HLDG

Pair Trading with Dow Jones and EXPRES2ION BIOTECH

The main advantage of trading using opposite Dow Jones and EXPRES2ION BIOTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, EXPRES2ION BIOTECH 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 EXPRES2ION BIOTECH will offset losses from the drop in EXPRES2ION BIOTECH's long position.

The idea behind Dow Jones Industrial and EXPRES2ION BIOTECH HLDG 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.