Correlation Between Aecon and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aecon 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 Aecon and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aecon Group and Dow Jones Industrial, you can compare the effects of market volatilities on Aecon 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 Aecon with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aecon and Dow Jones.
Diversification Opportunities for Aecon and Dow Jones
Very poor diversification
The 3 months correlation between Aecon and Dow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aecon Group 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 Aecon 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 Aecon Group 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 Aecon i.e., Aecon and Dow Jones go up and down completely randomly.
Pair Corralation between Aecon and Dow Jones
Assuming the 90 days trading horizon Aecon Group is expected to generate 3.75 times more return on investment than Dow Jones. However, Aecon is 3.75 times more volatile than Dow Jones Industrial. It trades about 0.28 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 2,078 in Aecon Group on August 28, 2024 and sell it today you would earn a total of 834.00 from holding Aecon Group or generate 40.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
Aecon Group vs. Dow Jones Industrial
Performance |
| Timeline |
Aecon and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aecon Group
Pair trading matchups for Aecon
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aecon and Dow Jones
The main advantage of trading using opposite Aecon and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aecon 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.| Aecon vs. Stantec | Aecon vs. Martinrea International | Aecon vs. Finning International | Aecon vs. WSP Global |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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