Correlation Between Arbitrage Event and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Arbitrage Event 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 Arbitrage Event and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Arbitrage Event Driven and Dow Jones Industrial, you can compare the effects of market volatilities on Arbitrage Event 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 Arbitrage Event with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbitrage Event and Dow Jones.
Diversification Opportunities for Arbitrage Event and Dow Jones
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arbitrage and Dow is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Arbitrage Event Driven 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 Arbitrage Event 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 The Arbitrage Event Driven 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 Arbitrage Event i.e., Arbitrage Event and Dow Jones go up and down completely randomly.
Pair Corralation between Arbitrage Event and Dow Jones
Assuming the 90 days horizon The Arbitrage Event Driven is expected to generate 0.22 times more return on investment than Dow Jones. However, The Arbitrage Event Driven is 4.51 times less risky than Dow Jones. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.0 per unit of risk. If you would invest 1,179 in The Arbitrage Event Driven on December 11, 2024 and sell it today you would earn a total of 12.00 from holding The Arbitrage Event Driven or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Arbitrage Event Driven vs. Dow Jones Industrial
Performance |
| Timeline |
Arbitrage Event and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
The Arbitrage Event Driven
Pair trading matchups for Arbitrage Event
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Arbitrage Event and Dow Jones
The main advantage of trading using opposite Arbitrage Event and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbitrage Event 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.| Arbitrage Event vs. Investec Global Franchise | Arbitrage Event vs. Ab Global Real | Arbitrage Event vs. Franklin Mutual Global | Arbitrage Event vs. Barings Global Floating |
| Dow Jones vs. The Gap, | Dow Jones vs. Corporacion America Airports | Dow Jones vs. Mesa Air Group | Dow Jones vs. National Vision Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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