Correlation Between BCEG Environmental and Dow Jones
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By analyzing existing cross correlation between BCEG Environmental Remediation and Dow Jones Industrial, you can compare the effects of market volatilities on BCEG Environmental 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 BCEG Environmental with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCEG Environmental and Dow Jones.
Diversification Opportunities for BCEG Environmental and Dow Jones
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCEG and Dow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BCEG Environmental Remediation 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 BCEG Environmental 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 BCEG Environmental Remediation 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 BCEG Environmental i.e., BCEG Environmental and Dow Jones go up and down completely randomly.
Pair Corralation between BCEG Environmental and Dow Jones
Assuming the 90 days trading horizon BCEG Environmental Remediation is expected to under-perform the Dow Jones. In addition to that, BCEG Environmental is 4.25 times more volatile than Dow Jones Industrial. It trades about -0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,410,864 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 1,080,201 from holding Dow Jones Industrial or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.36% |
| Values | Daily Returns |
BCEG Environmental Remediation vs. Dow Jones Industrial
Performance |
| Timeline |
BCEG Environmental and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BCEG Environmental Remediation
Pair trading matchups for BCEG Environmental
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BCEG Environmental and Dow Jones
The main advantage of trading using opposite BCEG Environmental and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCEG Environmental 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.The idea behind BCEG Environmental Remediation and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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