Correlation Between AVY Precision and Dow Jones
Can any of the company-specific risk be diversified away by investing in both AVY 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 AVY 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 AVY Precision Technology and Dow Jones Industrial, you can compare the effects of market volatilities on AVY 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 AVY Precision with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVY Precision and Dow Jones.
Diversification Opportunities for AVY Precision and Dow Jones
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AVY and Dow is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding AVY Precision Technology 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 AVY 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 AVY Precision Technology 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 AVY Precision i.e., AVY Precision and Dow Jones go up and down completely randomly.
Pair Corralation between AVY Precision and Dow Jones
Assuming the 90 days trading horizon AVY Precision Technology is expected to under-perform the Dow Jones. In addition to that, AVY Precision is 1.87 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,179,460 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
AVY Precision Technology vs. Dow Jones Industrial
Performance |
| Timeline |
AVY Precision and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
AVY Precision Technology
Pair trading matchups for AVY Precision
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with AVY Precision and Dow Jones
The main advantage of trading using opposite AVY Precision and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVY 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.| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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