Correlation Between ADS Maritime and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ADS Maritime 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 ADS Maritime and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADS Maritime Holding and Dow Jones Industrial, you can compare the effects of market volatilities on ADS Maritime 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 ADS Maritime with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADS Maritime and Dow Jones.
Diversification Opportunities for ADS Maritime and Dow Jones
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between ADS and Dow is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ADS Maritime Holding 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 ADS Maritime 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 ADS Maritime Holding 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 ADS Maritime i.e., ADS Maritime and Dow Jones go up and down completely randomly.
Pair Corralation between ADS Maritime and Dow Jones
Assuming the 90 days trading horizon ADS Maritime is expected to generate 2.66 times less return on investment than Dow Jones. In addition to that, ADS Maritime is 3.68 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of volatility. If you would invest 3,302,749 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 1,122,034 from holding Dow Jones Industrial or generate 33.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
ADS Maritime Holding vs. Dow Jones Industrial
Performance |
| Timeline |
ADS Maritime and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ADS Maritime Holding
Pair trading matchups for ADS Maritime
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ADS Maritime and Dow Jones
The main advantage of trading using opposite ADS Maritime and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADS Maritime 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.| ADS Maritime vs. Havila Shipping ASA | ADS Maritime vs. Shelf Drilling | ADS Maritime vs. Solstad Offsho | ADS Maritime vs. Eidesvik Offshore ASA |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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