Correlation Between Arctic Gold and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Arctic Gold 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 Arctic Gold and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Gold Publ and Dow Jones Industrial, you can compare the effects of market volatilities on Arctic Gold 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 Arctic Gold with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Gold and Dow Jones.
Diversification Opportunities for Arctic Gold and Dow Jones
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arctic and Dow is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ 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 Arctic Gold 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 Arctic Gold Publ 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 Arctic Gold i.e., Arctic Gold and Dow Jones go up and down completely randomly.
Pair Corralation between Arctic Gold and Dow Jones
Assuming the 90 days trading horizon Arctic Gold Publ is expected to under-perform the Dow Jones. In addition to that, Arctic Gold is 6.87 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Gold Publ vs. Dow Jones Industrial
Performance |
| Timeline |
Arctic Gold and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Arctic Gold Publ
Pair trading matchups for Arctic Gold
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Arctic Gold and Dow Jones
The main advantage of trading using opposite Arctic Gold and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Gold 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.| Arctic Gold vs. Bjorn Borg AB | Arctic Gold vs. Diadrom Holding AB | Arctic Gold vs. Anoto Group AB | Arctic Gold vs. Cloetta AB |
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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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