Correlation Between Newtree CoLtd and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Newtree CoLtd 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 Newtree CoLtd and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newtree CoLtd and Dow Jones Industrial, you can compare the effects of market volatilities on Newtree CoLtd 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 Newtree CoLtd with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newtree CoLtd and Dow Jones.
Diversification Opportunities for Newtree CoLtd and Dow Jones
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Newtree and Dow is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Newtree CoLtd 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 Newtree CoLtd 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 Newtree CoLtd 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 Newtree CoLtd i.e., Newtree CoLtd and Dow Jones go up and down completely randomly.
Pair Corralation between Newtree CoLtd and Dow Jones
Assuming the 90 days trading horizon Newtree CoLtd is expected to under-perform the Dow Jones. In addition to that, Newtree CoLtd is 5.41 times more volatile than Dow Jones Industrial. It trades about -0.31 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Newtree CoLtd vs. Dow Jones Industrial
Performance |
| Timeline |
Newtree CoLtd and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Newtree CoLtd
Pair trading matchups for Newtree CoLtd
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Newtree CoLtd and Dow Jones
The main advantage of trading using opposite Newtree CoLtd and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newtree CoLtd 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.| Newtree CoLtd vs. Cherrybro coLtd | Newtree CoLtd vs. Busan Industrial Co | Newtree CoLtd vs. Busan Ind | Newtree CoLtd vs. Mirae Asset Daewoo |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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