Correlation Between Generative and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Generative 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 Generative and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generative AI Solutions and Dow Jones Industrial, you can compare the effects of market volatilities on Generative 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 Generative with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generative and Dow Jones.
Diversification Opportunities for Generative and Dow Jones
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Generative and Dow is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Generative AI Solutions 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 Generative 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 Generative AI Solutions 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 Generative i.e., Generative and Dow Jones go up and down completely randomly.
Pair Corralation between Generative and Dow Jones
Assuming the 90 days horizon Generative AI Solutions is expected to generate 20.3 times more return on investment than Dow Jones. However, Generative is 20.3 times more volatile than Dow Jones Industrial. It trades about 0.35 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 8.50 in Generative AI Solutions on October 20, 2024 and sell it today you would earn a total of 11.50 from holding Generative AI Solutions or generate 135.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Generative AI Solutions vs. Dow Jones Industrial
Performance |
| Timeline |
Generative and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Generative AI Solutions
Pair trading matchups for Generative
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Generative and Dow Jones
The main advantage of trading using opposite Generative and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generative 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.| Generative vs. Cementos Pacasmayo SAA | Generative vs. Cadence Design Systems | Generative vs. Where Food Comes | Generative vs. Emerson Electric |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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