Correlation Between Autocanada and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Autocanada 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 Autocanada and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autocanada and Dow Jones Industrial, you can compare the effects of market volatilities on Autocanada 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 Autocanada with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocanada and Dow Jones.
Diversification Opportunities for Autocanada and Dow Jones
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Autocanada and Dow is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Autocanada 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 Autocanada 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 Autocanada 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 Autocanada i.e., Autocanada and Dow Jones go up and down completely randomly.
Pair Corralation between Autocanada and Dow Jones
Assuming the 90 days trading horizon Autocanada is expected to generate 2.88 times more return on investment than Dow Jones. However, Autocanada is 2.88 times more volatile than Dow Jones Industrial. It trades about 0.27 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.42 per unit of risk. If you would invest 1,777 in Autocanada on November 2, 2024 and sell it today you would earn a total of 218.00 from holding Autocanada or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Autocanada vs. Dow Jones Industrial
Performance |
| Timeline |
Autocanada and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Autocanada
Pair trading matchups for Autocanada
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Autocanada and Dow Jones
The main advantage of trading using opposite Autocanada and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autocanada 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.| Autocanada vs. Martinrea International | Autocanada vs. Linamar | Autocanada vs. NFI Group | Autocanada vs. Element Fleet Management |
| Dow Jones vs. Boston Properties | Dow Jones vs. Suntory Beverage Food | Dow Jones vs. Envista Holdings Corp | Dow Jones vs. Fevertree Drinks Plc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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