Correlation Between Arkema ADR and DOW

By analyzing existing cross correlation between Arkema ADR and DOW, you can compare the effects of market volatilities on Arkema ADR and DOW 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 Arkema ADR with a short position of DOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema ADR and DOW.

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Can any of the company-specific risk be diversified away by investing in both Arkema ADR and DOW 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 Arkema ADR and DOW into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Arkema ADR and DOW

0.0
  Correlation Coefficient
Arkema ADR
DOW

Pay attention - limited upside

The 3 months correlation between Arkema and DOW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arkema ADR and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Arkema ADR 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 Arkema ADR are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Arkema ADR i.e., Arkema ADR and DOW go up and down completely randomly.
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Pair Corralation between Arkema ADR and DOW

If you would invest  2,790,960  in DOW on August 30, 2021 and sell it today you would earn a total of  698,974  from holding DOW or generate 25.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.2%
ValuesDaily Returns

Arkema ADR  vs.  DOW

 Performance (%) 
      Timeline 

Arkema ADR and DOW Volatility Contrast

 Predicted Return Density 
      Returns 

Arkema ADR

Pair trading matchups for Arkema ADR

Arweave vs. Arkema ADR
Arcbest Corp vs. Arkema ADR
Bitcoin SV vs. Arkema ADR
Plug Power vs. Arkema ADR
GM vs. Arkema ADR
Bitcoin vs. Arkema ADR
Tesla vs. Arkema ADR
SysCoin vs. Arkema ADR
BriaCell Therapeutics vs. Arkema ADR
Expensify Inc vs. Arkema ADR
Enovix Corp vs. Arkema ADR
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Arkema ADR as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Arkema ADR's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Arkema ADR's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Arkema ADR.

DOW

Pair trading matchups for DOW

Tesla vs. DOW
Microsoft Corp vs. DOW
GM vs. DOW
Ford vs. DOW
Smart Bitcoin vs. DOW
Arcbest Corp vs. DOW
BriaCell Therapeutics vs. DOW
Bitcoin vs. DOW
Bitcoin SV vs. DOW
Bitcoin Cash vs. DOW
Plug Power vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.

Pair Trading with Arkema ADR and DOW

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

Arkema ADR

Pair trading matchups for Arkema ADR

Tesla vs. Arkema ADR
BriaCell Therapeutics vs. Arkema ADR
Ford vs. Arkema ADR
Du Pont vs. Arkema ADR
Expensify Inc vs. Arkema ADR
Salesforce vs. Arkema ADR
Bitcoin Cash vs. Arkema ADR
Bitcoin SV vs. Arkema ADR
Plug Power vs. Arkema ADR
Smart Bitcoin vs. Arkema ADR
GM vs. Arkema ADR
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Arkema ADR as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Arkema ADR's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Arkema ADR's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Arkema ADR.
The idea behind Arkema ADR and DOW 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.

DOW

Pair trading matchups for DOW

GM vs. DOW
Expensify Inc vs. DOW
Ford vs. DOW
Plug Power vs. DOW
Enovix Corp vs. DOW
SysCoin vs. DOW
Bitcoin vs. DOW
Microsoft Corp vs. DOW
Arweave vs. DOW
BriaCell Therapeutics vs. DOW
Tesla vs. DOW
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against DOW as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. DOW's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, DOW's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to DOW.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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