Correlation Between Access Power and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Access Power 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 Access Power and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Access Power Co and Dow Jones Industrial, you can compare the effects of market volatilities on Access Power 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 Access Power with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Access Power and Dow Jones.
Diversification Opportunities for Access Power and Dow Jones
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Access and Dow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Access Power Co 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 Access Power 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 Access Power Co 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 Access Power i.e., Access Power and Dow Jones go up and down completely randomly.
Pair Corralation between Access Power and Dow Jones
Given the investment horizon of 90 days Access Power Co is expected to generate 42.14 times more return on investment than Dow Jones. However, Access Power is 42.14 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.07 per unit of risk. If you would invest 0.20 in Access Power Co on August 24, 2024 and sell it today you would lose (0.12) from holding Access Power Co or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Access Power Co vs. Dow Jones Industrial
Performance |
| Timeline |
Access Power and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Access Power Co
Pair trading matchups for Access Power
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Access Power and Dow Jones
The main advantage of trading using opposite Access Power and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Power 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.| Access Power vs. BCE Inc | Access Power vs. Axiologix | Access Power vs. Advanced Info Service | Access Power vs. American Nortel Communications |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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