Correlation Between NEW MILLENNIUM and Dow Jones
Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM 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 NEW MILLENNIUM and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and Dow Jones Industrial, you can compare the effects of market volatilities on NEW MILLENNIUM 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 NEW MILLENNIUM with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and Dow Jones.
Diversification Opportunities for NEW MILLENNIUM and Dow Jones
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEW and Dow is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON 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 NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 NEW MILLENNIUM i.e., NEW MILLENNIUM and Dow Jones go up and down completely randomly.
Pair Corralation between NEW MILLENNIUM and Dow Jones
Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to under-perform the Dow Jones. In addition to that, NEW MILLENNIUM is 2.86 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 0.09 per unit of volatility. If you would invest 3,773,511 in Dow Jones Industrial on October 12, 2024 and sell it today you would earn a total of 490,009 from holding Dow Jones Industrial or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW MILLENNIUM IRON vs. Dow Jones Industrial
Performance |
| Timeline |
NEW MILLENNIUM and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
NEW MILLENNIUM IRON
Pair trading matchups for NEW MILLENNIUM
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with NEW MILLENNIUM and Dow Jones
The main advantage of trading using opposite NEW MILLENNIUM and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM 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.| NEW MILLENNIUM vs. QINGCI GAMES INC | NEW MILLENNIUM vs. Boyd Gaming | NEW MILLENNIUM vs. UPDATE SOFTWARE | NEW MILLENNIUM vs. Align Technology |
| Dow Jones vs. Toro | Dow Jones vs. Foot Locker | Dow Jones vs. Abercrombie Fitch | Dow Jones vs. 51Talk Online Education |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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