Correlation Between Jentech Precision and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Jentech Precision 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 Jentech Precision and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jentech Precision Industrial and Dow Jones Industrial, you can compare the effects of market volatilities on Jentech Precision 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 Jentech Precision with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jentech Precision and Dow Jones.
Diversification Opportunities for Jentech Precision and Dow Jones
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jentech and Dow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Jentech Precision Industrial 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 Jentech Precision 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 Jentech Precision Industrial 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 Jentech Precision i.e., Jentech Precision and Dow Jones go up and down completely randomly.
Pair Corralation between Jentech Precision and Dow Jones
Assuming the 90 days trading horizon Jentech Precision Industrial is expected to generate 4.28 times more return on investment than Dow Jones. However, Jentech Precision is 4.28 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 38,750 in Jentech Precision Industrial on August 31, 2024 and sell it today you would earn a total of 92,250 from holding Jentech Precision Industrial or generate 238.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.23% |
| Values | Daily Returns |
Jentech Precision Industrial vs. Dow Jones Industrial
Performance |
| Timeline |
Jentech Precision and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Jentech Precision Industrial
Pair trading matchups for Jentech Precision
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Jentech Precision and Dow Jones
The main advantage of trading using opposite Jentech Precision and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jentech Precision 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 Jentech Precision Industrial 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.| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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