Correlation Between SCHMID Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SCHMID Group 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 SCHMID Group and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCHMID Group NV and Dow Jones Industrial, you can compare the effects of market volatilities on SCHMID Group 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 SCHMID Group with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCHMID Group and Dow Jones.
Diversification Opportunities for SCHMID Group and Dow Jones
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SCHMID and Dow is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SCHMID Group NV 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 SCHMID Group 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 SCHMID Group NV 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 SCHMID Group i.e., SCHMID Group and Dow Jones go up and down completely randomly.
Pair Corralation between SCHMID Group and Dow Jones
Assuming the 90 days horizon SCHMID Group NV is expected to generate 25.48 times more return on investment than Dow Jones. However, SCHMID Group is 25.48 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 23.00 in SCHMID Group NV on September 6, 2024 and sell it today you would earn a total of 6.00 from holding SCHMID Group NV or generate 26.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 28.69% |
Values | Daily Returns |
SCHMID Group NV vs. Dow Jones Industrial
Performance |
Timeline |
SCHMID Group and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
SCHMID Group NV
Pair trading matchups for SCHMID Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SCHMID Group and Dow Jones
The main advantage of trading using opposite SCHMID Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCHMID Group 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.SCHMID Group vs. Mitsubishi UFJ Lease | SCHMID Group vs. Direct Line Insurance | SCHMID Group vs. Sun Life Financial | SCHMID Group vs. Old Republic International |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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