Correlation Between STARLUX Airlines and Dow Jones
Can any of the company-specific risk be diversified away by investing in both STARLUX Airlines 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 STARLUX Airlines and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STARLUX Airlines Co and Dow Jones Industrial, you can compare the effects of market volatilities on STARLUX Airlines 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 STARLUX Airlines with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of STARLUX Airlines and Dow Jones.
Diversification Opportunities for STARLUX Airlines and Dow Jones
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between STARLUX and Dow is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding STARLUX Airlines 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 STARLUX Airlines 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 STARLUX Airlines 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 STARLUX Airlines i.e., STARLUX Airlines and Dow Jones go up and down completely randomly.
Pair Corralation between STARLUX Airlines and Dow Jones
Assuming the 90 days trading horizon STARLUX Airlines Co is expected to under-perform the Dow Jones. In addition to that, STARLUX Airlines is 2.83 times more volatile than Dow Jones Industrial. It trades about -0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,383,361 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 1,107,704 from holding Dow Jones Industrial or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.59% |
| Values | Daily Returns |
STARLUX Airlines Co vs. Dow Jones Industrial
Performance |
| Timeline |
STARLUX Airlines and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
STARLUX Airlines Co
Pair trading matchups for STARLUX Airlines
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with STARLUX Airlines and Dow Jones
The main advantage of trading using opposite STARLUX Airlines and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STARLUX Airlines 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.| STARLUX Airlines vs. Taiwan Semiconductor Manufacturing | STARLUX Airlines vs. Hon Hai Precision | STARLUX Airlines vs. MediaTek | STARLUX Airlines vs. Chunghwa Telecom Co |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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