Correlation Between Science Applications and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Dow Jones Industrial, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Dow Jones.
Diversification Opportunities for Science Applications and Dow Jones
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Science and Dow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati 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 Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Dow Jones go up and down completely randomly.
Pair Corralation between Science Applications and Dow Jones
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Dow Jones. In addition to that, Science Applications is 3.61 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 0.17 per unit of volatility. If you would invest 4,233,015 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 253,016 from holding Dow Jones Industrial or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Dow Jones Industrial
Performance |
| Timeline |
Science Applications and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Science Applications International
Pair trading matchups for Science Applications
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Science Applications and Dow Jones
The main advantage of trading using opposite Science Applications and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. PKSHA TECHNOLOGY INC | Science Applications vs. Amkor Technology | Science Applications vs. ULTRA CLEAN HLDGS | Science Applications vs. Goosehead Insurance |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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