Correlation Between Beijing E and Dow Jones
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By analyzing existing cross correlation between Beijing E Hualu and Dow Jones Industrial, you can compare the effects of market volatilities on Beijing E 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 Beijing E with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing E and Dow Jones.
Diversification Opportunities for Beijing E and Dow Jones
Poor diversification
The 3 months correlation between Beijing and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Beijing E Hualu 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 Beijing E 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 Beijing E Hualu 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 Beijing E i.e., Beijing E and Dow Jones go up and down completely randomly.
Pair Corralation between Beijing E and Dow Jones
Assuming the 90 days trading horizon Beijing E Hualu is expected to generate 8.3 times more return on investment than Dow Jones. However, Beijing E is 8.3 times more volatile than Dow Jones Industrial. It trades about 0.2 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.18 per unit of risk. If you would invest 1,416 in Beijing E Hualu on August 28, 2024 and sell it today you would earn a total of 1,213 from holding Beijing E Hualu or generate 85.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.63% |
| Values | Daily Returns |
Beijing E Hualu vs. Dow Jones Industrial
Performance |
| Timeline |
Beijing E and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Beijing E Hualu
Pair trading matchups for Beijing E
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Beijing E and Dow Jones
The main advantage of trading using opposite Beijing E and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing E 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.| Beijing E vs. China World Trade | Beijing E vs. China Railway Materials | Beijing E vs. Renxin New Material | Beijing E vs. Malion New Materials |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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