Correlation Between Ametek and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Ametek 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 Ametek and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ametek Inc and Dow Jones Industrial, you can compare the effects of market volatilities on Ametek 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 Ametek with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and Dow Jones.
Diversification Opportunities for Ametek and Dow Jones
Poor diversification
The 3 months correlation between Ametek and Dow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc 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 Ametek 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 Ametek Inc 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 Ametek i.e., Ametek and Dow Jones go up and down completely randomly.
Pair Corralation between Ametek and Dow Jones
Considering the 90-day investment horizon Ametek Inc is expected to generate 2.23 times more return on investment than Dow Jones. However, Ametek is 2.23 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 0.26 per unit of risk. If you would invest 16,805 in Ametek Inc on August 28, 2024 and sell it today you would earn a total of 2,907 from holding Ametek Inc or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ametek Inc vs. Dow Jones Industrial
Performance |
| Timeline |
Ametek and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Ametek Inc
Pair trading matchups for Ametek
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Ametek and Dow Jones
The main advantage of trading using opposite Ametek and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek 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.The idea behind Ametek Inc and Dow Jones Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |