Correlation Between Prothena Plc and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Prothena Plc 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 Prothena Plc and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prothena plc and Dow Jones Industrial, you can compare the effects of market volatilities on Prothena Plc 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 Prothena Plc with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prothena Plc and Dow Jones.
Diversification Opportunities for Prothena Plc and Dow Jones
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prothena and Dow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Prothena plc 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 Prothena Plc 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 Prothena plc 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 Prothena Plc i.e., Prothena Plc and Dow Jones go up and down completely randomly.
Pair Corralation between Prothena Plc and Dow Jones
Given the investment horizon of 90 days Prothena plc is expected to generate 4.2 times more return on investment than Dow Jones. However, Prothena Plc is 4.2 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 827.00 in Prothena plc on September 1, 2025 and sell it today you would earn a total of 248.00 from holding Prothena plc or generate 29.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prothena plc vs. Dow Jones Industrial
Performance |
| Timeline |
Prothena Plc and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Prothena plc
Pair trading matchups for Prothena Plc
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Prothena Plc and Dow Jones
The main advantage of trading using opposite Prothena Plc and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prothena Plc 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.| Prothena Plc vs. Indutrade AB | Prothena Plc vs. BE Semiconductor Industries | Prothena Plc vs. ON Semiconductor | Prothena Plc vs. Elmos Semiconductor SE |
| Dow Jones vs. DATA Communications Management | Dow Jones vs. Altair Corp | Dow Jones vs. Corsair Gaming | Dow Jones vs. On4 Communications |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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