Correlation Between Motech Industries and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Motech Industries 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 Motech Industries and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motech Industries Co and Dow Jones Industrial, you can compare the effects of market volatilities on Motech Industries 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 Motech Industries with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motech Industries and Dow Jones.
Diversification Opportunities for Motech Industries and Dow Jones
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Motech and Dow is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Motech Industries Co 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 Motech Industries 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 Motech Industries Co 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 Motech Industries i.e., Motech Industries and Dow Jones go up and down completely randomly.
Pair Corralation between Motech Industries and Dow Jones
Assuming the 90 days trading horizon Motech Industries is expected to generate 4.65 times less return on investment than Dow Jones. In addition to that, Motech Industries is 2.11 times more volatile than Dow Jones Industrial. It trades about 0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motech Industries Co vs. Dow Jones Industrial
Performance |
| Timeline |
Motech Industries and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Motech Industries Co
Pair trading matchups for Motech Industries
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Motech Industries and Dow Jones
The main advantage of trading using opposite Motech Industries and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motech Industries 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.| Motech Industries vs. United Renewable Energy | Motech Industries vs. Sino American Silicon Products | Motech Industries vs. Wafer Works | Motech Industries vs. Gigasolar Materials |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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