Correlation Between One Choice and Dow Jones
Can any of the company-specific risk be diversified away by investing in both One Choice 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 One Choice and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Choice 2025 and Dow Jones Industrial, you can compare the effects of market volatilities on One Choice 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 One Choice with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and Dow Jones.
Diversification Opportunities for One Choice and Dow Jones
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between One and Dow is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding One Choice 2025 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 One Choice 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 One Choice 2025 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 One Choice i.e., One Choice and Dow Jones go up and down completely randomly.
Pair Corralation between One Choice and Dow Jones
Assuming the 90 days horizon One Choice is expected to generate 2.77 times less return on investment than Dow Jones. But when comparing it to its historical volatility, One Choice 2025 is 3.26 times less risky than Dow Jones. It trades about 0.4 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of 291,093 from holding Dow Jones Industrial or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
One Choice 2025 vs. Dow Jones Industrial
Performance |
| Timeline |
One Choice and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
One Choice 2025
Pair trading matchups for One Choice
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with One Choice and Dow Jones
The main advantage of trading using opposite One Choice and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Choice 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.| One Choice vs. Mid Cap Value | One Choice vs. Equity Growth Fund | One Choice vs. Income Growth Fund | One Choice vs. Diversified Bond Fund |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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