Correlation Between Great Taipei and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Great Taipei 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 Great Taipei and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Taipei Gas and Dow Jones Industrial, you can compare the effects of market volatilities on Great Taipei 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 Great Taipei with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Taipei and Dow Jones.
Diversification Opportunities for Great Taipei and Dow Jones
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and Dow is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Great Taipei Gas 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 Great Taipei 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 Great Taipei Gas 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 Great Taipei i.e., Great Taipei and Dow Jones go up and down completely randomly.
Pair Corralation between Great Taipei and Dow Jones
Assuming the 90 days trading horizon Great Taipei is expected to generate 5.79 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Great Taipei Gas is 3.86 times less risky than Dow Jones. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Taipei Gas vs. Dow Jones Industrial
Performance |
| Timeline |
Great Taipei and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Great Taipei Gas
Pair trading matchups for Great Taipei
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Great Taipei and Dow Jones
The main advantage of trading using opposite Great Taipei and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Taipei 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.| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Leatec Fine Ceramics | Great Taipei vs. Information Technology Total |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |