Correlation Between Woori Technology and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Woori Technology 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 Woori Technology and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woori Technology Investment and Dow Jones Industrial, you can compare the effects of market volatilities on Woori Technology 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 Woori Technology with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woori Technology and Dow Jones.
Diversification Opportunities for Woori Technology and Dow Jones
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woori and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Woori Technology Investment 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 Woori Technology 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 Woori Technology Investment 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 Woori Technology i.e., Woori Technology and Dow Jones go up and down completely randomly.
Pair Corralation between Woori Technology and Dow Jones
Assuming the 90 days trading horizon Woori Technology Investment is expected to generate 7.32 times more return on investment than Dow Jones. However, Woori Technology is 7.32 times more volatile than Dow Jones Industrial. It trades about 0.07 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 412,000 in Woori Technology Investment on September 1, 2024 and sell it today you would earn a total of 466,000 from holding Woori Technology Investment or generate 113.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.31% |
| Values | Daily Returns |
Woori Technology Investment vs. Dow Jones Industrial
Performance |
| Timeline |
Woori Technology and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Woori Technology Investment
Pair trading matchups for Woori Technology
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Woori Technology and Dow Jones
The main advantage of trading using opposite Woori Technology and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woori Technology 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.| Woori Technology vs. Samsung Electronics Co | Woori Technology vs. Samsung Electronics Co | Woori Technology vs. KB Financial Group | Woori Technology vs. Shinhan Financial Group |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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