Correlation Between American Aires and Dow Jones
Can any of the company-specific risk be diversified away by investing in both American Aires 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 Aires 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 Aires and Dow Jones Industrial, you can compare the effects of market volatilities on American Aires 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 Aires with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Aires and Dow Jones.
Diversification Opportunities for American Aires and Dow Jones
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Dow is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Aires 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 Aires 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 Aires 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 Aires i.e., American Aires and Dow Jones go up and down completely randomly.
Pair Corralation between American Aires and Dow Jones
Assuming the 90 days horizon American Aires is expected to under-perform the Dow Jones. In addition to that, American Aires is 5.46 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Aires vs. Dow Jones Industrial
Performance |
| Timeline |
American Aires and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
American Aires
Pair trading matchups for American Aires
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with American Aires and Dow Jones
The main advantage of trading using opposite American Aires and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Aires 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 Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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