Correlation Between Albany International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Albany International 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 Albany International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albany International and Dow Jones Industrial, you can compare the effects of market volatilities on Albany International 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 Albany International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albany International and Dow Jones.
Diversification Opportunities for Albany International and Dow Jones
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Albany and Dow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Albany International 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 Albany International 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 Albany International 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 Albany International i.e., Albany International and Dow Jones go up and down completely randomly.
Pair Corralation between Albany International and Dow Jones
Considering the 90-day investment horizon Albany International is expected to generate 2.75 times more return on investment than Dow Jones. However, Albany International is 2.75 times more volatile than Dow Jones Industrial. It trades about 0.32 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 7,225 in Albany International on August 27, 2024 and sell it today you would earn a total of 1,399 from holding Albany International or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albany International vs. Dow Jones Industrial
Performance |
| Timeline |
Albany International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Albany International
Pair trading matchups for Albany International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Albany International and Dow Jones
The main advantage of trading using opposite Albany International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albany International 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.| Albany International vs. Culp Inc | Albany International vs. Unifi Inc | Albany International vs. Toray Industries |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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