Correlation Between Acme United and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Acme United 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 Acme United and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Dow Jones Industrial, you can compare the effects of market volatilities on Acme United 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 Acme United with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Dow Jones.
Diversification Opportunities for Acme United and Dow Jones
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Acme and Dow is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Acme United 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 Acme United 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 Acme United 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 Acme United i.e., Acme United and Dow Jones go up and down completely randomly.
Pair Corralation between Acme United and Dow Jones
Considering the 90-day investment horizon Acme United is expected to generate 1.74 times more return on investment than Dow Jones. However, Acme United is 1.74 times more volatile than Dow Jones Industrial. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 4,050 in Acme United on August 27, 2024 and sell it today you would earn a total of 246.00 from holding Acme United or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Dow Jones Industrial
Performance |
| Timeline |
Acme United and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Acme United
Pair trading matchups for Acme United
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Acme United and Dow Jones
The main advantage of trading using opposite Acme United and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United 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.| Acme United vs. Mannatech Incorporated | Acme United vs. Inter Parfums | Acme United vs. Nu Skin Enterprises | Acme United vs. Procter Gamble |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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