Correlation Between American Commerce and Dow Jones
Can any of the company-specific risk be diversified away by investing in both American Commerce 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 American Commerce and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Commerce Solutions and Dow Jones Industrial, you can compare the effects of market volatilities on American Commerce 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 American Commerce with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Commerce and Dow Jones.
Diversification Opportunities for American Commerce and Dow Jones
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Dow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Commerce Solutions 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 American Commerce 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 American Commerce Solutions 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 American Commerce i.e., American Commerce and Dow Jones go up and down completely randomly.
Pair Corralation between American Commerce and Dow Jones
Given the investment horizon of 90 days American Commerce Solutions is expected to generate 62.43 times more return on investment than Dow Jones. However, American Commerce is 62.43 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 0.02 in American Commerce Solutions on August 24, 2024 and sell it today you would lose (0.01) from holding American Commerce Solutions or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Commerce Solutions vs. Dow Jones Industrial
Performance |
| Timeline |
American Commerce and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
American Commerce Solutions
Pair trading matchups for American Commerce
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with American Commerce and Dow Jones
The main advantage of trading using opposite American Commerce and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Commerce 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.| American Commerce vs. Aumann AG | American Commerce vs. Alfa Laval AB | American Commerce vs. Arista Power | American Commerce vs. Atlas Copco AB |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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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