Correlation Between ALi Corp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ALi Corp 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 ALi Corp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALi Corp and Dow Jones Industrial, you can compare the effects of market volatilities on ALi Corp 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 ALi Corp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALi Corp and Dow Jones.
Diversification Opportunities for ALi Corp and Dow Jones
Very weak diversification
The 3 months correlation between ALi and Dow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ALi 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 ALi Corp 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 ALi 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 ALi Corp i.e., ALi Corp and Dow Jones go up and down completely randomly.
Pair Corralation between ALi Corp and Dow Jones
Assuming the 90 days trading horizon ALi Corp is expected to generate 8.69 times more return on investment than Dow Jones. However, ALi Corp is 8.69 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 2,145 in ALi Corp on September 3, 2024 and sell it today you would earn a total of 600.00 from holding ALi Corp or generate 27.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
ALi Corp vs. Dow Jones Industrial
Performance |
| Timeline |
ALi Corp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ALi Corp
Pair trading matchups for ALi Corp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ALi Corp and Dow Jones
The main advantage of trading using opposite ALi Corp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALi Corp 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.| ALi Corp vs. Taiwan Semiconductor Manufacturing | ALi Corp vs. Yang Ming Marine | ALi Corp vs. ASE Industrial Holding | ALi Corp vs. AU Optronics |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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