Correlation Between 70GD and Dow Jones
Can any of the company-specific risk be diversified away by investing in both 70GD 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 70GD and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 70GD and Dow Jones Industrial, you can compare the effects of market volatilities on 70GD 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 70GD with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of 70GD and Dow Jones.
Diversification Opportunities for 70GD and Dow Jones
Modest diversification
The 3 months correlation between 70GD and Dow is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding 70GD 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 70GD 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 70GD 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 70GD i.e., 70GD and Dow Jones go up and down completely randomly.
Pair Corralation between 70GD and Dow Jones
Assuming the 90 days trading horizon 70GD is expected to generate 1.38 times more return on investment than Dow Jones. However, 70GD is 1.38 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.3 per unit of risk. If you would invest 68.00 in 70GD on September 24, 2024 and sell it today you would earn a total of 3.00 from holding 70GD or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
70GD vs. Dow Jones Industrial
Performance |
| Timeline |
70GD and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
70GD
Pair trading matchups for 70GD
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with 70GD and Dow Jones
The main advantage of trading using opposite 70GD and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 70GD 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.| 70GD vs. Ryanair Holdings plc | 70GD vs. CVS Health Corp | 70GD vs. Norwegian Air Shuttle | 70GD vs. Air Products Chemicals |
| Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Sonida Senior Living | Dow Jones vs. Avadel Pharmaceuticals PLC | Dow Jones vs. Cardinal Health |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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