Correlation Between Lier Chemical and Dow Jones
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By analyzing existing cross correlation between Lier Chemical Co and Dow Jones Industrial, you can compare the effects of market volatilities on Lier Chemical 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 Lier Chemical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lier Chemical and Dow Jones.
Diversification Opportunities for Lier Chemical and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lier and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lier Chemical Co 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 Lier Chemical 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 Lier Chemical Co 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 Lier Chemical i.e., Lier Chemical and Dow Jones go up and down completely randomly.
Pair Corralation between Lier Chemical and Dow Jones
Assuming the 90 days trading horizon Lier Chemical Co is expected to under-perform the Dow Jones. In addition to that, Lier Chemical is 3.18 times more volatile than Dow Jones Industrial. It trades about -0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of volatility. If you would invest 3,624,787 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 853,413 from holding Dow Jones Industrial or generate 23.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.95% |
| Values | Daily Returns |
Lier Chemical Co vs. Dow Jones Industrial
Performance |
| Timeline |
Lier Chemical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lier Chemical Co
Pair trading matchups for Lier Chemical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lier Chemical and Dow Jones
The main advantage of trading using opposite Lier Chemical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lier Chemical 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.The idea behind Lier Chemical Co and Dow Jones Industrial 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 Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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