Correlation Between Basso Industry and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Basso Industry 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 Basso Industry and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basso Industry Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Basso Industry 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 Basso Industry with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basso Industry and Dow Jones.
Diversification Opportunities for Basso Industry and Dow Jones
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Basso and Dow is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Basso Industry Corp 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 Basso Industry 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 Basso Industry Corp 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 Basso Industry i.e., Basso Industry and Dow Jones go up and down completely randomly.
Pair Corralation between Basso Industry and Dow Jones
Assuming the 90 days trading horizon Basso Industry Corp is expected to under-perform the Dow Jones. In addition to that, Basso Industry is 1.27 times more volatile than Dow Jones Industrial. It trades about -0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 per unit of volatility. If you would invest 4,329,703 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 126,804 from holding Dow Jones Industrial or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Basso Industry Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Basso Industry and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Basso Industry Corp
Pair trading matchups for Basso Industry
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Basso Industry and Dow Jones
The main advantage of trading using opposite Basso Industry and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basso Industry 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.| Basso Industry vs. Cheng Shin Rubber | Basso Industry vs. Kung Long Batteries | Basso Industry vs. Pou Chen Corp | Basso Industry vs. China Steel Chemical |
| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
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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