Correlation Between Workiva and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Workiva 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 Workiva and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workiva and Dow Jones Industrial, you can compare the effects of market volatilities on Workiva 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 Workiva with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and Dow Jones.
Diversification Opportunities for Workiva and Dow Jones
Almost no diversification
The 3 months correlation between Workiva and Dow is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Workiva 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 Workiva 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 Workiva 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 Workiva i.e., Workiva and Dow Jones go up and down completely randomly.
Pair Corralation between Workiva and Dow Jones
Assuming the 90 days trading horizon Workiva is expected to generate 2.6 times more return on investment than Dow Jones. However, Workiva is 2.6 times more volatile than Dow Jones Industrial. It trades about 0.39 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 7,350 in Workiva on September 1, 2024 and sell it today you would earn a total of 1,750 from holding Workiva or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Workiva vs. Dow Jones Industrial
Performance |
| Timeline |
Workiva and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Workiva
Pair trading matchups for Workiva
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Workiva and Dow Jones
The main advantage of trading using opposite Workiva and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva 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.| Workiva vs. RETAIL FOOD GROUP | Workiva vs. Japan Asia Investment | Workiva vs. The Trade Desk | Workiva vs. ECHO INVESTMENT ZY |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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